UOB to approve car loans in 15 minutes

UOB, the local banking giant, says its speedy new car loan system removes the speedbumps that can affect car sales

SINGAPORE — Get a car loan approved in 15 minutes? United Overseas Bank says it has sped up the process to make it possible, and with only three pieces of data from the applicant: their name, NRIC and mobile phone number.

The banking giant has teamed up with various parties to offer the speedy loans here. These include six new car dealerships, Performance Premium Selection (a used car retailer) and Carousell (an online marketplace with a section for cars).

Between them, the six partnering dealerships cover 11 car brands that account for two-thirds of new car sales in Singapore. The brands involved are Audi, Citroën, Kia, Lexus, Mazda, Mercedes-Benz, Mitsubishi, Nissan, and Subaru.

Customers browsing the used car listings on Carousell will be able to get their loan through the site; once the funds are approved, the relevant dealer calls the buyer to complete the transaction.

The move gives UOB the chance to increase its share in a market whose size is constrained by the annual supply of Certificates Of Entitlement. The bank currently writes one out of every four new car loans.

UOB’s head of Personal Financial Services Singapore, Jacquelyn Tan (pictured above), said dealers here have complained that the existing loan process is too complicated and takes too long. “The whole excitement and joy of purchasing a car meets speedbumps when it comes to financing,” she said.

Surveys conducted by the bank showed that filling up existing paper application forms alone can take an hour. Submissions can only be made during banks’ opening hours, and approval can take up to three days.

Ms Tan said that 76 percent of dealers asked UOB to streamline the application process, and 45 wanted the bank to do away with paper documentation.

The new UOB car loan process is fully automated. The secret of its speed is that algorithms largely decide which customers to grant loans to.

“The ability to do it within 15 minutes is because of our proprietary credit decisioning engine, and also because our systems are fully integrated with Credit Bureau Singapore and also MyInfo,” Ms Tan told CarBuyer.

MyInfo is a service for SingPass users to manage their personal data, and pre-fill forms in digital services transactions.

Banks already use “credit decisioning engines” to screen customers for loans, but UOB is the first to do so on such a scale.

The bank launched the new car loan process at the KF1 Karting Circuit in Kranji by organising a short race for the media, thus ensuring that the message could not have been clearer: in banking, as in racing, speed is all important.

CB Analysis: Banking on speed

The lone ranger may have been the fastest gun in the West, but UOB wants to be the fastest loan arranger in town.

Why? Because only so many cars a year can be sold in Singapore, thanks to the Quota System. With a fixed market size, the only way for competing banks to grow their sales is to grow market share. And UOB increases its chances of winning a car buyer’s business if it’s the easiest and most responsive loan writer.

For the dealers involved, it’s a way to snag a sale and make sure it doesn’t get away. Buying a car is often an emotionally charged, spur-of-the-moment affair, and if you’re a sales executive the last thing you want is to interrupt your customers’ excitement of buying a new car with one hour of paperwork.

That said, dealers will continue to offer a panel of lenders for buyers to choose from, so it’s possible that rival banks will try to compete by, say, offering a lower interest rate — in that scenario, someone who could wait three days for loan approval would save money.

The banks also rely on car salesmen to push their loans for them, so rival banks could also try to defend market share by increasing the incentive (that is, the commission) that they offer to car dealers and their sales teams.

That said, banking in general is headed towards greater automation, and UOB is merely at the forefront of a wider trend. The bank’s ability to grant loans in 15 minutes is down to its use of a “credit decisioning engine”. Essentially, algorithms ingest your data and decide if you’re worthy of a loan.

Expect other banks to ramp up their use of such systems in response, and for UOB itself to apply the technology to other areas. Today it’s a speedy car loan, tomorrow it’s a quickie mortgage. But only if the computer says so.

about the author

Leow Ju-Len
Leow Ju-Len is a lot older than he behaves. He's been writing about cars for 23 years. Someday he might do it coherently. Ju-Len believes in world peace and V8s, but not necessarily in that order.