Driven by digitally-savvy consumers and dealer demand for faster processing times, auto lenders increasingly integrate electronic contracting into their loan origination systems. A growing number of lenders have already adopted e-contracting, such as Toyota Financial Services and Nissan Motor Acceptance Corp.
The latest addition is Westlake Financial Services, an independent lender specializing in subprime auto loans. Westlake announced its partnership with RouteOne’s e-contracting platform Oct. 13. “For Westlake, RouteOne eContracting is all about providing faster funding to our dealers,” said Ian Anderson, group president of Westlake Financial Services, in a written statement. “We’ve always been about auto-decisioning, and we see this as a step toward auto-originations.”
Switching to digital processes can benefit finance providers, dealers and consumers, according to a recent white paper titled “Demystifying eContracting for Auto Finance,” from Baltimore, Md.-based eOriginal. The white paper provides a five-point checklist to ensure a successful transition to digital:
- Establish Your Evaluation Team
The first step, according to eOriginal, is to gather a team to lead the development process. The team should consist of employees from various departments, such as:
- Information Technology
- Line of Business Representatives
- Information Security
“The earlier these individuals are identified and included in the development process, the better,” according to the report.
- Formulate Your Business Case to Avoid Barriers to Acceptance
Implementing a new process will disrupt the old one. Companies should be aware of short-term added costs associated with this step. “It is important to focus the organizational goal on the benefits and potential ROI of implementing an improved, more efficient method,” eOriginal said. During the transition, there will also be a period of paper and electronic processes going on at the same time. “The best way to tackle this is to face it head on.”
- Choose Whether to Build or Buy a Solution
Many vendors that e-contracting solutions, tailored specifically for car finance providers. However, if a company has the necessary resources and expertise, it’s possible to build a customized solution. The team from Step 1 should weigh in before a final decision.
- Implement Your Solution: Sign Contract and Get Started
A home-grown solution can simply be switched on. With a vendor, there are services, products and warranties to discuss before signing a contract. “You also want to have exit strategies clearly defined that should cover inadequate service, breach of warranty, mergers & acquisitions, insolvency, and loss of key licensing,” the report suggests.
- Apply Best Practices: For Electronic Success
This step includes considering document data security, such as signer authentication, the report suggests. The paper said, “Don’t forget to have a plan for minimizing access to your organization’s confidential information.”
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