Rate Analytics and Optimization Combine to Speed Auto Loan Response and Enhance Profitability


This Automotive Financial Services company was struggling with exception prone, cumbersome manual processes in competing with local auto loan financing sources among its dealers nationwide.

By combining the perfect blend of simplicity and data science, PROS provided solutions to this Automotive Financial Services company that incorporated advanced analytical segmentation and price optimization. PROS cloud-based solutions will enhance the accuracy of retail rate sheets, provide more granulated FICO tiers, and require less manual intervention in the discount approval process.

As a result, the Automotive Financial Services company projects a buy rate lift of 11-13 bps that would translate into an annual impact of more than $30 million.


Like many of its peers in the automotive financial services industry, this company faced competitive and market dynamics that emphasized the urgent need for more sophisticated pricing capabilities. Growing competitive pressures from local auto lenders, dealer demands for greater speed, and efficiency in rate pricing along with increased regulatory scrutiny on dealer markup made upgrading its existing loan pricing system imperative. Forced to make constant exceptions to its published loan rate sheet, nearly half of this company’s loan transactions were discounted from list price in order to match local financing alternative sources. Managing hundreds of thousands of exceptions each year was extremely timeconsuming for the company’s central office analysts and often resulted in deep rate discounts that cut into loan profitability. In addition, the company needed a more auditable solution to help with transparency issues in order to meet compliance regulations as a lender.


With a goal of reducing escalations for exceptions and improving uplift on auto loan rates, PROS Revenue and Profit Realization Solutions refine borrower segments using loan applicant data, and optimize rate sheet pricing to make offers as automated and accurate as possible.

The PROS solution enables the company to:

  • Automate workflows by centrally managing rate sheets using PROS cloud-based software incorporating granular price segments based on historical loan performance.
  •  Create customer specific rate offers for faster turnaround on quotes and more accurate rates to minimize exception requests.
  •  Optimize pricing for rate sheets using new granular segments based on significant attributes.
  •  Provide integrated visibility into the profitability of rate offers encompassing full gross-to-net waterfall (risk adjusted) techniques.
  •  Deliver compliance analytics that measure and monitor buy-rate, customer-rate and markup variability thus minimizing exceptions.


Automotive Financial Services company is realizing several key benefits, including the ability to:

  •  Analyze, update and approve prices faster and more effectively.
  •  Deliver an initial quality price to the dealer based on granular, risk-based segmentation.
  •  Base decisions on pricing science that will help maximize share and margin for transactions.
  •  Build in more profitable offers and decision-making at the contract, dealer and regional dealer support network level.
  •  Proactively measure, monitor and remediate targeted rate variance to comply with regulations.

The company estimates the PROS solution will deliver a Return on Assets lift in a range of 11 – 13 bps that would translate into an additional $27 million to $33 million in revenue each year. In addition to these direct financial benefits, the company will gain:

  •  Reduced risk exposure through decreased variability and more accurate rate justification.
  •  Automated processes to reduce errors and save time.
  •  Enhanced insights and real-time feedback on pricing decisions
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