Tag: F&I

7 Features Your Compliance Software Should Have

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With the constant threat of audits, fines and lawsuits, every dealership must take compliance seriously. Fortunately, there are cost savings to be found in integrating finance and sales flow compliance functions. Here are seven features to look for when choosing compliance software:

1. Visibility and transparency
It’s important to have a compliance dashboard that monitors employee and deal activity in real-time from a single screen. Keeping a close eye on employee actions lets you step in to make corrections as needed, heading off non-compliance risk.

2. Integrated FTC and OFAC requirements
To meet FTC and OFAC requirements and reduce fraud risk, your workflow needs to include the proper checkpoints. The FTC Red Flags Rule is a requirement designed to help protect against identity theft.  The Office of Foreign Assets Control (OFAC) requires a check of names against its “Specially Designated Nationals” list (SDN) of people with whom you cannot legally do business. You should look for software that automatically pulls Red Flags, provides out-of-wallet knowledge-based authentication questions, and offers additional questions when a customer does not answer enough of the previous questions correctly.

3. Fully compliant menu selling
Consistent presentations and full disclosure should be built into the sales process to reduce your compliance risk. This is an important selling category to watch because many industry experts believe that the FTC will be zeroing in on aftermarket products in the near future with enforcement actions for possible unfair and deceptive practices.

4. Secure document management
To meet compliance regulations, you must store deal-related documents including credit applications, privacy notices, credit reports, pencils, contracts, menus and more. Secure electronic deal jackets make these documents easier to access as needed, protect them from misuse, and also reduce the need to store paper files at your dealership.

5. Ability to print risk-based pricing credit score disclosure notices and privacy notices
Every time you take a credit application, you need a Credit Score Disclosure Notice – and it’s a best practice to give each customer a privacy notice at the same time. Ideally, your software should give you the ability to print risk-based pricing credit score disclosure notices and privacy notices as part of the application submission process.

6. Adverse Action reports
Compliance technology should be able to immediately identify and give you insight into which customers might need an Adverse Action notice.

7. Integrated compliance checks and balances
Compliance should be an integral part of your software so that your employees immediately receive an on-screen notice if a step is overlooked. This information should also be displayed on a performance dashboard so that management can be aware of possible problem areas requiring intervention such as additional training.

To learn how your dealership can integrate compliance checkpoints into your workflow, visit our Compliance product page and schedule a live demo with a Dealertrack F&I sales representative. 

eContracting and Data Security

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Dealerships collect a significant amount of personally identifiable information (PII) about their customers in the process of selling them a vehicle and arranging financing. Information including the customer’s name, date of birth, place of residence, employment information, phone number, email address and social security number can all be at risk of misuse when not properly handled and secured.

The vulnerability of paper documents

Many people tend to associate data breaches with electronic transactions, but paper records can actually be much more vulnerable. Companies have been fined thousands and even millions of dollars for exposing printed customer information in ways that include:

  • Mailing letters with social security numbers visible through the envelope window.
  • Faxing sensitive information to an unauthorized individual.
  • Leaving customer files on public transport.

Paper document mismanagement isn’t always so dramatic. It can include letting paper records sit on a printer or copier or out on a desk where unauthorized people could view them, or putting files in a dumpster when they should be shredded. Even sending documents by mail or via a delivery service can increase the risk that a paper file may fall into the wrong hands.

eContracting security

Federal legislation that applies to eContracts, including the Electronic Signatures in Global and National Commerce (E-SIGN) Act, includes provisions that electronic transactions must be conducted through secure channels to protect sensitive information. The law requires that digital information be securely archived, indexed, and retrievable in a timely manner.

Access to a dealership’s eContracting solution is password protected and limited to authorized dealership personnel. The system encrypts all contract and customer data, and it flows securely and directly into a lender’s Loan Origination System (LOS).

Contract packages are stored in a secure eVault with multiple backup systems to protect the data and keep it accessible when needed. In cases where paper is required later, authorized representatives of the lender or dealer can easily export the eContract documents and print them without requiring the customer to re-sign.

The system also ensures that only one “authoritative copy” of the eContract can exist at any time. This security measure prevents fraud and potential misuse that can come from multiple contracts for the same deal.

Your dealership’s compliance protocols should include practices that encourage secure handling of customer data regardless of whether it’s on paper or stored digitally. The security features built into eContracting can help keep that data safe within the dealership, in transit to lenders, and after the deal is completed.

Find out more about how Dealertrack Digital Contracting helps secure and streamline your contracting processes. To learn more about regulations around data security, download the 2024 Dealertrack Compliance Guide.

How econtracting can improve your dealership’s bottom line

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When a dealership is considering a switch to electronic contracting from traditional paper contracts, it’s important for them to figure the value they’ll receive from modernizing their processes.

Some paper contract expenses are easy to identify:

  • Paper, ink, toner
  • Maintenance of copiers and fax machines
  • Shipping costs and related materials

Then there are the expenses related to the time the process takes. Dealertrack data shows that the average time in transit for paper contracts is five days. In the meantime, holding costs accumulate and cash flow is halted.

Doing the math

A Savings Calculator can help dealerships estimate their projected savings using digital contracting.

Here’s how the calculator works:

Let’s say a dealership has an average of 200 contracts each month with an average loan value of $18,000. Their floorplan rate is 3% and it costs them $15 for overnight shipping and $2 to prepare basic ancillary documents on paper for each deal. Their contract in transit time using paper contracting averages 5 days. Plugging these figures into the calculator, we find that using eContracting for all their contracts would save them $4,879 per month, which adds up to $53,765 per year.

Interested in seeing how your dealership’s numbers add up? Use our Savings Calculator to find out.

Selecting a cost-effective eContracting solution

To maximize cost savings, it’s important for dealerships to choose a solution that doesn’t trade one type of expense for another. If an eContracting solution requires that a dealership purchase expensive equipment or pay a transaction fee for each contract they submit, it will take a lot longer to see a positive return on the technology investment.

An eContracting solution should maximize efficiency and time-savings so that the dealership staff has the capacity to work with more customers. That means a solution that requires less data re-entry and includes functionality to catch input errors and missed signatures to cut down on re-contracting is ideal.

Digital Contracting on Dealertrack uniFI is hardware-agnostic so it can be used on any device including tablets, touchscreens and laptops. And, there’s no transaction fee for dealers. Take into account the savings of submitting all deal documents to lenders instantly and getting funded as fast as the same day, and that’s the ROI dealerships are looking for.

Find out how quickly your dealership can start saving with Digital Contracting on Dealertrack uniFI.

Improving On Your Paper Contracting Workflow

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When it comes to switching from paper contracts to eContracting or digital contracting, some dealerships have a hard time letting go of the workflows that they are used to. Even when they realize that their paper contract workflow is full of disruptions, inconveniences and expenses, it takes a mindset change to make the switch.

Let’s take a look at some of the ways a digital contracting workflow improves upon the paper process.

A place for everything and everything in its place

With paper contracting, you have piles of paperwork that must be printed as multiple copies and kept organized in paper deal jackets.

Digital Contracting on Dealertrack uniFI is designed to integrate with your DMS to minimize data reentry that can lead to errors.  It makes the contracting process more efficient by placing all documents in a single electronic deal jacket.

Need to add the customer’s drivers license? Just snap a photo on a mobile device and upload it to the deal jacket. Is the customer purchasing F&I products? Those contracts are in the deal jacket as well. Not sure what documents the lender requires? There’s a live funding checklist to make sure they’re all there before you submit.

Let’s not do this again

How often does your dealership end up re-contracting due to a missed signature or a calculation error? There are manual ways to make sure your contracts are complete and accurate before you submit them – we’ve heard of a dealership that had three different managers review each deal package. But that’s a time-consuming and expensive method to ensure that the contract is correct and ready to be sent to the lender.

With digital contracting, a real-time error display alerts you to any mistakes as you enter data. A verification step ensures that everything is signed before you submit the full package to the lender. No need to have your managers take up valuable time checking and double-checking, which makes them more available for customers.

Fast-forward to the good part

Test drives: fun. Taking delivery of a new car: exciting! Signing paperwork: heavy sigh.

So many steps of buying a car are legitimately positive for customers. However, when a car buyer is faced with a seemingly endless series of papers to sign, it can leave them frustrated and less than excited about their purchase.

But digital contracting smooths out the contracting stage and makes it feel like less of a chore for your customers. Contract review and digital signing can be done on whichever device works best for your process, either in-store or remotely. And sign-and-tap functionality to auto-fill signature fields leads to a faster signing process and helps ensure that you never miss a signature. That gets your customers to the best part of the purchase that much more quickly and helps maintain those positive CSI scores.

Want to know more about how Digital Contracting on Dealertrack uniFI can enhance your workflow? Let us show you!

How eContracting Reduces Data Re-Entry

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You’ve probably heard that going digital with your contract process helps increase accuracy and improve efficiency. So, how exactly does it do that?

The key is integration between dealership systems.

Technology + connection

Research shows that the average dealership uses six or more technology systems in their workflow. If your back office staff has to re-enter data from other systems to complete each eContract – switching back and forth between screens and re-typing customer and deal information – several things could happen:

  • A customer’s name, address or date of birth could be re-keyed incorrectly.
  • The process would take longer than if the information flowed from one system to the next.
  • Errors can lead to re-contracting and subsequent delay in funding.
  • You’d be adding to your customers’ wait time and their frustration.

Integrated technology systems allow customer and deal information to flow more smoothly from lead to contract with less duplicate data entry. That means more accuracy and efficiency for your dealership and a better experience for customers.

A seamless upload

It’s important to find a partner that can provide dealer-level mapping from your DMS. Because each dealership is unique and each lender has different requirements, you want to be able to import data in a way that’s tailored to your specific needs.

With the right data mapping in place, your dealership will gain credit application and F&I process efficiencies in addition to eContracting workflow improvements.

Ideally, you want to choose an eContracting solution that also supports the aftermarket portion of the transaction. That way, you can digitally submit the contract for the entire deal, including F&I products.

Fast deal finalization

Minimizing data entry at the contract stage helps you finalize the deal more quickly. That added efficiency is good for customer satisfaction and it helps make your team more productive, which frees up time for them to help more customers.

Sign and tap eSigning

Simplify the signing process and never miss a signature. eSigning gives you and your customers flexible and convenient signing options in-store or remotely, and ensures that each document has been signed before you can move to the next. That helps eliminate one of the most common contracting errors that can lead to re-contracting.

Click to learn more about DMS integrations for Digital Contracting with Dealertrack uniFI.

3 Reasons Lenders Appreciate eContracting

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Not sure your lenders are interested in eContracting? Cox Automotive research shows that the need and demand for eContracting efficiency is high for both dealers and lenders. In many cases, lenders are waiting for their dealers to get set up for eContracting so they can all benefit.

Here are three reasons that lenders appreciate eContracting solutions:

1. Improved Accuracy

The last thing lenders want to do is reject the funding package a dealership sent them because of errors or missed signatures. More and more lenders are eContracting with their dealer customers because the technology helps reduce errors that can lead to re-contracting.

When you’re working with multiple systems, re-typing and re-entering data, there’s a possibility that human error can lead to inaccuracies. Integrations with other dealership systems help eContracting platforms boost contract accuracy by reducing or eliminating the need for data re-entry.

eContracting solutions are also designed to verify data entry in real time, flagging potential errors and missing signatures before the contracts are even submitted.

Additional integrated functionality can make it easier for a dealership to submit accurate contracts. For example, lender checklists help ensure that the contract package is complete with digital copies of all required forms upon submission.

When the lender needs more information for funding after the initial submission, eContracting can even support uploads of trailing documents to keep the review process moving smoothly.

2. Faster Processing

With eContracting, contract data can be pushed directly into the lender’s loan origination system (LOS), which speeds up the review process and allows for faster funding. Compare that to many manual processes where documents must be sent to the lender by a combination of overnight delivery and fax, which takes an average of five days in transit.

Ideally, you want a complete digital funding package that keeps all deal documents together, saving the lender the time they would have to spend matching documents that arrived by separate methods.

With eContracting, the lender gets all of the contracting documents immediately, which gives them the capability to fund as fast as the same day.

3. Better Service

Finally, lenders are eager for dealers to submit contracts digitally because it gives them the opportunity to provide faster and better service, which is key for strengthening their partnership. They understand that improving a dealership’s cash flow is vital—and faster loan review and funding helps accomplish that for their dealer customers.

See the growing list of lenders  to learn how Digital Contracting on Dealertrack F&I helps dealerships get faster funding from lenders.

4 Ways eContracting is Easier Than You Think

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When a dealership is planning to introduce new technology, the initial worry is often, “Will it be a hassle?” Here are four reasons that adopting and using eContracting can be easy and beneficial for dealers.

Setup is simple

As with most technologies, eContracting setup is “one and done.” There’s minimal setup and easy integrations with other systems. The daily hassle of paper contracts is much more of an obstacle for dealerships than the minimal setup required by eContracting platforms.

Multiple devices can support eContracting

It’s important to know what hardware is necessary for the eContracting functionality you plan to use. Some providers require proprietary devices for contract review and signing—or otherwise limit your technology options for using their solution. Choosing a hardware-agnostic solution will allow you to work with the devices you already use every day, which will save you time and money.

Lender form changes and updates can be done automatically

When using DMS for paper contracts, there are licensing and programming fees. eContracting has the potential to eliminate those fees, as the latest approved forms from lenders can be added at no charge. With no paper programs, you can avoid paper licensing – and always have access to the correct lender version of every form.

A digital workflow adds efficiency and convenience

Workflows for paper contracting processes are filled with everyday hassles where customers must sign paper form after paper form, all of which are then overnighted to lenders – sometimes sent back for corrections, then shipped again – and finally, securely filed.

eContracting offers a streamlined workflow that is easy to learn and use. The benefits are immediate, with file cabinets full of paperwork replaced by digital deal jackets that include every document needed to complete a deal. Some eContracting platforms even include aftermarket contracts.

You’ll find that integration with other dealership systems means less data re-entry, which helps prevent the introduction of errors. That means eContracting helps dealerships submit accurate contracts quickly and easily, with no more back-and-forth with lenders.

Whether your dealership is considering a switch to eContracting or looking to maximize the benefits of your current eContracting platform, the more streamlined processes of eContracting can help you leave many of your current hassles behind you.

Click to learn how your dealership can take the hassles out of contracting with Digital Contracting on Dealertrack F&I.

Less Paperwork Equals More Customer Satisfaction

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We live in a world where purchase transactions keep getting faster and more convenient. Consumers are accustomed to ordering coffee with an app and having it waiting when they arrive, getting next-day or even same-day delivery from Amazon Prime, and pulling up to Target or Walmart to have merchandise they ordered loaded directly into their cars.

When these same consumers visit a dealership, they fully expect to discover a technology-enabled sales process that will be an improvement over what they experienced with previous purchases. The good news is that dealers are responding to this expectation, with 69% of franchise dealers adding at least one digital step due to COVID-19 according to the Cox Automotive Digitization of Online Retail Study.

How does that help? The same research uncovered that the number one benefit for car buyers of a digital process is saving time. The average amount of time a customer spends at the dealership has been dropping steadily and they would prefer to spend their time on enjoyable activities like test drives. However, the 2020 Cox Automotive Car Buyer Journey study found that nearly half of their time is spent on negotiations and paperwork, the part of the process they dislike the most.

Despite 92% of car buyers researching their vehicle purchase online, many dealerships still do not offer customers the option to sign their paperwork digitally. So even when a customer has researched and started much of their deal online, most still face an outdated paper and wet signing process before they can take delivery of their vehicle.

The pile of paperwork comes out near the end of their purchase process, which risks lowering CSI scores when the lengthy contract review and signing process takes the customer’s positive car buying experience and adds frustration.

One of the drawbacks of the paperwork stage is that it’s where any inefficiencies in the process start to snowball. If a dealership has unconnected systems that force re-entry of customer data, it’s way too easy to introduce errors and create a contract that the lender may not be able to process on first submission. If that happens, it can delay the transaction and inconvenience the customer even further.

Using a combination of desktop and mobile technology to take paper out of the sales process can make a significant difference to the customer experience. Just starting with digital review and signing of contracts can make a significant difference in the customer expereince. eContracting helps eliminate those intimidating stacks of contracts and replace them with convenient review and sign-and-tap functionality. Additional digital solutions including mobile data collection and menu technology to present aftermarket products can provide a more customer-friendly approach overall.

The digital deal addresses many of the frustrations car buyers have with the car buying process. And it’s better for dealerships as well. In fact, 77% of franchise dealers that have enabled digital contract review and signing are more satisfied with their overall digital retailing experience.

Find out more about how Digital Contracting with Dealertrack uniFI is a customer-friendly and dealership-friendly solution.

Best Practices for Remote Signing

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Dealerships have made impressive strides in responding to the restrictions imposed by CDC guidelines and social distancing rules by adopting tools that allow them to work with customers remotely. One vital part of that process is remote contract review and signing.

With a growing percentage of deals starting online, remote signing followed by at-home delivery are logical next steps to ensure convenient and socially distanced auto purchases for consumers.

Here are some important considerations for successful remote signing:

  • Make sure your internet connection is secure – An important aspect of compliance is protecting customer and deal data. Especially if you’re working somewhere other than the dealership, be sure your wi-fi signal is password protected.
  • Begin with some show-and-tell – Start by having a conversation with the buyer to make sure they have access to the proper technology required for the contract review and signing: a desktop computer, laptop or tablet with an up-to-date browser that’s connected to the internet. Then explain the eSign process, including the need for their consent, and talk through how the signature capture process works.
  • Verify the customer’s identity – When you’re dealing with customers remotely, it’s more important than ever to make sure every customer is who they say they are. Using a compliance solution like Dealertrack Compliance during the deal process for vital Red Flag alerts and OFAC checks can help – and can also provide out-of-wallet questions if needed.
  • The next best thing to face-to-face – We recommend using video conferencing, Facetime or another video chat app to help make sure you’re dealing with the right person before you connect to their device for contract review and signing. Video is also helpful for walking the customer through the review and signing process so you can see their screen and provide direction as needed.
  • Record the signing ceremony – Choose a video conference platform that allows you to record the signing session for the purposes of ID verification and fraud risk mitigation. Tell the customer you’ll be recording and get their permission before you begin.
  • Give the customer time to read the fine print – Before the customer signs, make sure they review the contract. They can do it on the screen, but you should recommend that they use the print or download functionality to create their own copy.
  • Follow delivery protocols and best practices1 – The vehicle should be delivered as soon as possible after contract signing. When you arrive at the customer’s location,2 start by validating the buyer’s identity by matching their driver’s license to the information on the contract.
  • Don’t renegotiate upon delivery – Do not negotiate terms and conditions of the deal at the consumer’s home, as this could invoke a three-day rescission period that allows the customer to cancel their transaction.
  • Disinfect high-touch areas of the vehicle – Relieve any customer concerns by cleaning the vehicle in accordance with CDC guidelines and telling the customer about your sanitizing procedures.
  • Finalize all documentation – If there are any remaining DMV or dealer documents, have the customer complete them now. Use a tablet to photograph and upload any remaining stips and trailing documents. Be sure to have the customer sign the delivery receipt and keep it for your records. And don’t forget to deliver the final signed copy of the contract to your customer.

If a customer will be at the dealership to sign their contract and take delivery of their vehicle, you can still give them the option of bringing in their own device for signing. That can help to ensure social distancing and alleviate any concern the customer may have about handling shared devices.

Dealertrack assisted Remote Signing is available for dealerships with Digital Contracting on Dealertrack F&I. Click to learn more about getting started with assisted Remote Signing at your dealership.

The 2022 Dealertrack Compliance Guide includes a new chapter on automotive eCommerce sales. Download the Compliance Guide here.

.1 In locations where permitted by federal, state and local COVID-19 ordinances, consider offering at-home delivery and observe CDC protocols during vehicle delivery.
2 Customer must take delivery in the state they are in as out-of-state deliveries are not available at this time.

CASH FLOW OPPORTUNITIES: THINGS TO CONSIDER WHEN RETHINKING YOUR BACK-OFFICE PROCESS

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Now more than ever, dealers are looking for ways to promote efficient processes that can stimulate healthy revenue flow for their business. After all, cash is king, especially when looking at the current state of the economy and preparing for future trends. To stay competitive, it’s essential for dealerships to look for solutions that will help speed transactional processing of the inventory they source and sell.

Dealertrack Sr. Business Development Director Joey Yates and titling specialist David King recently explored cash flow efficiency in a video chat from their respective home offices. Through their discussion, they offer interesting insights and best practices for optimizing your back-office processes to help promote cash flow at your dealership, not only today, but for every day moving forward.

Understand the key drivers of cash flow at your dealership

Did you know that one of the most viable sources for cash flow at your dealership today is trade-ins? Here are some areas to look at to ensure that your trade-in program is operating at peak efficiency:

  • Inventory Sourcing – Source opportunistically, with cash flow in mind. When taking a vehicle in on trade, consider the speed of title receipt along with how fast you can recon the vehicle to determine when you can get to market and sell for cash fast. Vet your wins and employ a discerning eye towards trade and wholesale acquisitions to add to your inventory.
  • Marketability – Assess vehicles’ marketability and target key advertising channels to provide optimal results and visibility for vehicles you are looking to sell. This is especially important in today’s economy, where dealers are seeing a glut of supply and less immediate demand.
  • Process Efficiency – You want to move your inventory fast and keep holding costs and bottlenecks in recouping funds from hindering your cash flow. Use digital solutions to understand the payoff amount left on each vehicle (if any) and get the title released quickly. This will help with inventory turn – whether off the lot or at auction – and optimize cash flow for your dealership.

Digital tools help streamline processes

Manual processing of payoff and title release is time-consuming and can steal valuable time away from your remarketing window of profitability. The holding costs for slow movers or vehicles in title release limbo at auction can add up quickly, and negatively impact your bottom line.

A digital solution like Dealertrack Accelerated Title® allows you to gain insights into title details, calculate a reliable payoff, understand the profit potential of the vehicle, and gauge the opportunity for quick resale. You also want tools that will aid you in gaining the title quickly to help ensure speed for move to auction or remarket. When you add speed, insights and accuracy to your back-office process, you can boost fluid cash flow and recognize profit opportunities on your trade-in vehicles.

Want to learn more? Watch Joey and David’s conversation to hear their insights on increasing back-office efficiency, or download our Titling for a New Today Guide that focuses on cash flow opportunities for your back office.