How to manage credit checks for your car subscription service
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How to manage credit checks for your car subscription service

Matt Blake
July 21, 2022

Car subscription has been quickly recognised as the affordable alternative to traditional car ownership and rental leasing programs. While this forms an attractive value proposition for motorists, many businesses looking to offer car subscription services as part of their existing sales and finance strategies are hesitant on its potential in attracting customers with poor credit history. Though customers with poor credit ratings do seek out low or no-deposit finance deals, the assumption that poor credit scores are driving the subscription market is flawed. The reality is that consumer buying behaviour is changing quickly, with many now priortising affordability and flexibility due to changing financial priorities.

Such behavioural change is attributed to millennials who represent around 25% of the UK population. This demographic comprise of the following: 

  • homeowners with children, decades of work experience and respectable levels of disposable income.
  • job-hoppers  who are prepared to change paths, take risks and become self-employed having grown up used to financial instability and market disruption. 

To demonstrate the potential of this demographic, studies conducted by our credit bureau partner, Experian reveal that millennial spend in retail and leisure are not just growing year-on-year, but also exceeding the national average. Adding to this, their average credit rating has increased after the COVID pandemic. As such, initial assumptions of this new demographic around credit scores should be taken lightly - especially with Volvo reporting that their subscription service accounted for 15% of retail sales last year and that the share of these (91%) were new to the Volvo brand. This only reveals how car subscription is becoming a lucrative way to draw new customers and revenue streams into a business, including demographics particularly looking for an affordable alternative to traditional means of car ownership. 

How Loopit streamlines the process of credit checks 

Conducting credit checks are a crucial part of the onboarding process for any car subscription provider. While there is the option to partner with a credit bureau, the downside is that obtaining ancillary data may lead to slower credit checks and potential bottlenecks further down the onboarding experience. This can be an unfavourable outcome should this mean that customers are less likely to convert on their subscription booking. Loopit, on the other hand, provides real time credit checks with our all-in-one car subscription platform. 

1. Real-time credit check processes 

Partnering with Experian, Loopit performs credit checks in real time during the booking process so that your business can make quick and reliable decisions about each new customer. To further safeguard your business, Loopit also automates security deposit amounts based on the risk profile alongside our team of experts who will advise you on practice fraud prevention guidelines.

2. Determine your level of acceptable risk 

Loopit will perform a credit and risk assessment during the application process and assign a ranking of either Pass, Low Risk, High Risk or Fail, and an assessment score between 0 and 100, with 100 being the best possible score. Our configurable platform will enable your business to manage your acceptable risk by defining the upfront security deposit required for each assessment ranking. While Loopit recommends a larger upfront deposit for higher risk customers, your business can adjust this accordingly to your needs and vehicles. 

3. Deliver self-serve functionalities 

Loopit provides your business a seamless self-onboarding experience so that your customers can enjoy the benefits of performing credit checks and identity verification easily and in real time without the need to upload any documentation. By removing all bottlenecks that would otherwise been present by using other external technology providers, our all-in-one car subscription platform that is integrated into your website allows you to speed up your signup flow and convert more subscribers.

Interested in learning more about how you can launch your own car subscription service and start acquiring new market segments? Get in touch with our team for a demo: https://www.loopit.co/contact

About the author
Matt is the Loopit National Sales Manager for the UK. With over 20 years of experience in the automotive industry with brands including Keyloop, CitNOW and RAPID RTC, Matt is no stranger to the power of digital innovation for Dealerships, Dealer Groups & OEM’s alike.
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