Tag: Lenders

Why Now is the Time for Auto Lenders to Go Digital

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Over the past several years, the paperwork and manual processes for handling auto loans have been gradually giving way to technology-based processes. But this year has changed everything. In the wake of the COVID-19 pandemic, digital solutions have quickly moved from “nice to have” to “vital” for both dealers and lenders.

Consumers have led the charge: two-thirds of car buyers surveyed said they were more likely to purchase a vehicle 100% online1. Dealers have gotten up to speed quickly: the same study found that 81% of franchise dealers and 47% of independent dealers say they now have a digital retailing solution in place.

These technology solutions help keep consumers and dealership personnel safe while keeping the deals moving – but what role do lenders play? Digital retailing tools work similarly for lenders to initiate a contact-free browsing process that can turn casual shoppers into pre-approved, contract-ready buyers for their dealer partners.

With digital retailing technology helping dealerships work deals virtually and remotely, contracting electronically is the natural next step in the deal process. And today’s customers appreciate the contactless deal experience.

Now more than ever, dealers are relying on their lender partners to support the digital solutions that keep car sales moving. Lenders are embracing technology for driving consumer engagement and expediting the signing, submission, review and funding of dealers’ contract packages. Here are some of the drivers behind many lender modernization strategies.

Digital workflows drive efficiency for everyone — and enable lenders to appear as strong service partners

In the beginning, dealers’ eContracting adoption was driven by a desire to optimize workflow efficiency to counter margin pressure and gain cash flow fluidity. But today, a contactless contract signing process and fast funding are more important to dealers than ever — and Dealertrack data shows eContracting has lenders funding their dealers as fast as the same day. Improving on this level of service helps strengthen dealer partnerships. And strong partnerships can help drive more loan originations.

Digital contract packages are designed for completeness and accuracy, ensuring that no signatures are missed, no calculation errors have been made, and no required documents are overlooked. Dealertrack data shows that eContracting can help reduce returned contracts and lower the rate of re-contracting below 1%.2

And what about office space and paper clutter? With these paperless deals eliminating hefty paper contract packages, the documents are now stored digitally — freeing up office space and lowering storage fees, while still keeping the authoritative contract and digital data readily available in case of audit.

The way forward: matching technology to business strategy

Lenders’ unique financing models and business goals make one-size-fits-all solutions a speculative approach at best. There’s ample opportunity to implement digital strategies that align to a lender’s specific business goals and the resources they have available. The right technology partner will help lenders optimize their processes, drive the online experience consumers have come to expect, and help strengthen dealer partnerships through improved service.

Read more about lender strategies for the new digital car shopper.

.1Cox Automotive COVID-19 Digital Shopping Study, April 4-5, 2020
2Based on 2019 Dealertrack eContracting transaction data

The Recipe for Funding Auto Dealers Faster

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The old saying is that too many cooks spoil the broth. But when it comes to finding ways for lenders to handle large volumes of paper contracts until the auto industry fully transitions to electronic contracting, some extra help in the “kitchen” can make all the difference.

Taking the measure of the industry

Today, the auto retail industry is rapidly ramping up technology to meet the consumer expectations. Research has shown that 83% of consumers want to complete at least one purchase step online, yet nearly 90% still prefer to sign their final documents at the dealership.

That leaves lenders with a small number of dealers submitting contracts digitally, while the majority still mail in paper contracts. This can cause lenders to develop two divergent sets of processes that can increase the time it takes to process and fund auto loans.

This situation creates some dilemmas for lenders. One is that any efforts to create parallel processes to maximize speed and efficiency for both electronic and paper contract processes will likely become unnecessary within the next few years as consumers and dealers become more open to fully digital deals.

Another consideration is that all dealers want fast funding, regardless of whether they submit contracts electronically or on paper.

The recipe for success

Efficient paper contract processing and funding requires carefully weighed portions of accuracy and compliance at every level of workload.

The ingredients include:

  • The ability to handle same-day processing of all funding packages
  • Be able to appear to dealers as an “overnight” funder
  • Consistent turnaround time no matter the volume of contracts
  • 99% data accuracy at all times
  • Balanced operational costs and staffing

The right partnership can provide all of those and more to help you provide a five-star experience for all your dealer partners.

Want to learn more? Connect with a Dealertrack Lender Solutions expert to discuss the best options for your business.

Expedite Contract Processing Regardless of Workload

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eContracting has made it so indirect auto lenders can process contracts and fund their dealers faster. Unfortunately, many dealers haven’t given up the paper contracting habit yet, so lenders must find ways to beef up their contract processing on two fronts.

It can be a challenge for lenders to deliver faster funding for paper contract packages, especially if their in-house operations are set up for a certain level of processing volume.

Lending institutions can find themselves understaffed for peak car buying season, but reluctant to scale up permanently knowing that their loan volume will ebb and flow. Still, lenders must find a way to receive contracts, accurately enter all the data into their system, finalize the funding package, get the package through review and approval, and store all of the paperwork for the appropriate period.

The resources required for this process vary depending on the size of the lender, but the workload fluctuates regularly either way.
So how can a lending institution maximize their resources to keep loans processed efficiently?

One solution that many lenders turn to is a partnership with outside experts who can handle the contract submission workflow and help lenders stay flexible and improve their efficiency and profitability. This support team can facilitate both paper and eContract processing to give lenders optimum workflow year ‘round.

Want to learn more about optimizing your operations to deliver better dealer service? Download our eguide or schedule a no-obligation 1:1 consultation with your Lender Solutions Specialist today.

Faster Paper Contract Processing for Lenders

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The car buying process is getting more digitally connected with each passing year, yet most dealerships are still finalizing purchase contracts on paper. During this time when contract processing is a hybrid of traditional and paperless, it’s still possible for lenders to take some steps that will help them prepare for fully digital contracting.

The value of digital contract processing is easy to understand when you consider the extensive handling and manual data entry that lenders must undertake to process paper contracts. It can take days or even weeks from the time these contract packages ship out from the dealership before they make their way through lender review and approval for funding.

Dealertrack Digital Document Services provides a great solution to bridge the gap between paper and digital for lenders and speed funding. Take a look:


Savvy lenders understand that faster funding is the name of the game for supporting their dealer customers’ need for cash flow to help them stay profitable.

Utilizing Dealertrack as a technology partner helps lenders avoid the time-consuming tasks involved with data entry, validation and storage of paper contracts. Lenders gain efficiency to fund faster and keep dealers coming back for more.

To learn more, download The Lender Guide to Faster Paper Contract Processing.