back to articles | January 13, 2022 | Jamie Roy
Categories:   Useful Automotive Information
How Will Self-driving Cars Transform The Face Of The Finance Industry?
The automobile industry is essential to the economy, as they provide us with vehicles that are a staple of most of our social and economic activities. Cars are the most popular mode of transport, and trucks are a vital part of the transportation industry.
The automobile industry is essential to the economy, as they provide us with vehicles that are a staple of most of our social and economic activities. Cars are the most popular mode of transport, and trucks are a vital part of the transportation industry. Automobiles have been steadily improving since their origin, but breakthroughs in AI may potentially bring significant changes to the automobile industry. The biggest one of these changes are self-driving cars, in which cars can drive safely without the need of a human driver.
AI is at the heart of these and is involved in the safety of self-driving cars. As you probably realize, self-driving vehicles have the potential to change a lot of industries in ways that are hard to comprehend. There are still a long way to go before self-driving cars become commonplace as they are still in a research and testing phase, with some being on roads in a few areas. There is a lot of in-depth talk about various industries that will be affected but not much said about the finance industry. Therefore, in this article, we will discuss how self-driving cars can affect the finance industry, in particular. Without further delay, let’s dive in.
Drastic Changes in the Industry
Self-driving cars will completely change how the automobile industry works, which means that any related sectors will also have to face drastic changes. This includes industries like dealers, parking companies, and car insurance companies. The car finance industry will also be affected, and it will need to adjust accordingly. This is because it is estimated that all these related companies may lose hundreds of billions of dollars if they do not respond to these changes. But what exactly will the drastic change be that affects the finance industry? For starters, it is the possibility of car sharing that self-driving cars provide.
Possibility of Multi-People Financing
Car sharing is a concept that companies like Google are aiming for with self-driving cars in the future. This idea is that people can share cars with several people, and these cars will drive up to them automatically when they need to. This will reduce costs and reduce the number of cars on the street. This also means fewer people will be looking for car financing, which means the industry may lose a lot of money here. However, if car financing companies can adjust their policies to include financing for multiple people, this can work in their favor. Not only will people be able to manage the auto loan they choose to take, but it will also take many companies to catch up, meaning these companies stand to gain a lot potentially.
Changes in How Financing Policies Work
As you may well be aware, there are specific terms and policies that borrowers need to agree with before the lender provides them with the money. This is typically done by signing a document that lists all this information. Lending companies have specific policies in case accidents happen. Normally, they might require you to buy car insurance while you pay off the vehicle if this happens, adding to the costs customers will have to take. However, accidents are significantly less with self-driving cars as there is almost no chance for human errors. Self-driving cars are not influenced by a passenger being drunk, lacking coherent decision-making, or driving fast. This may eliminate the need for mandatory insurance, and the prices for optional insurance may drop significantly. This could also lead to a change in car financing policies, making the process a lot more financially manageable for borrowers.
The bottom line
Self-driving cars are the future and will bring many drastic changes to the automobile industry. These changes will cascade out to other sectors, including the car finance industry. These drastic changes will primarily affect how car financing loans will work with the possibility of multi-people car financing. In addition, this might lead to a shift in financing policies due to the increased safety that self-driving cars bring. We hope this article provides you with insight and are curious to hear what other changes you think self-driving cars could bring.