MVP System Optimizing Dealer Profit in Vehicle Financing
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Solution Overview
Problem
Automated credit approval systems for vehicle financing often fail to maximize dealer profit, leading to suboptimal deals and potential loss of sales, as they lack the ability to automatically determine the best financial structure within customer-affordable down payment and monthly payment constraints.
Innovation Solution
A computer-implemented method that receives input values for down payment and monthly payment, calculates and determines the financial structure providing the greatest profit for the seller, using the 'Maximize Vehicle Profit' (MVP) system to automatically adjust terms such as vehicle price and loan-term length, ensuring the dealer achieves maximum profit while meeting customer financial terms.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If automated loan approval systems are used, then deal closing speed is improved, but dealer profit maximization deteriorates
Solution Approach 1:
The system automatically adjusts multiple financial parameters including vehicle price, loan amount, down payment, and monthly payment to find the optimal combination that maximizes dealer profit. This resolves the contradiction by using algorithmic parameter optimization to achieve both fast automated processing and precise profit maximization.
Solution Approach 2:
The system incorporates feedback loops where profit calculations from different financial structure options are fed back into the decision-making process. The system evaluates multiple scenarios and selects the one providing greatest dealer profit, thereby achieving both speed and optimization precision simultaneously.
2Measurement precision
If manual loan review processes are used, then financing approval accuracy is improved, but deal closing time deteriorates
Solution Approach 1:
The system replaces manual mechanical review processes with automated computational algorithms that calculate financial structures and profit outcomes. This substitution maintains high accuracy in financing approval while eliminating the time delays inherent in manual processing.
Solution Approach 2:
The system performs preliminary calculations of multiple financial structure options and their profit implications before presenting the optimal deal to the customer. This advance computation ensures accurate financing approval and enables immediate deal closing without time-consuming manual review.
3Measurement precision
If multiple financial structure options are calculated, then dealer profit optimization is improved, but system complexity deteriorates
Solution Approach 1:
The system segments the complex profit optimization problem into distinct calculable components: vehicle price, loan amount, down payment, monthly payment, and profit margin. By breaking down the optimization into manageable segments, the system achieves precise dealer profit maximization without overwhelming complexity.
Solution Approach 2:
The system systematically varies financial parameters across multiple options and uses algorithmic logic to evaluate and compare profit outcomes. This structured parameter exploration achieves precise optimization while maintaining manageable system complexity through systematic computation rather than combinatorial explosion.
Data Source
AI summary
A method of determining a structure for financing a consumer product through a computer implemented process according to one embodiment comprising the steps of: receiving one or more fixed inputs including a monthly payment value and a down payment value; calculating a plurality of potential financial structures for the consumer product based upon the monthly payment value and the down payment value; and determining from the plurality of potential financial structures, a financial structure that provides a greatest profit for a seller of the consumer product.