Lenders and dealers are enhancing their digital contracting capabilities as more consumers take their car buying online.
Digital contracting solutions from dealership software provider Dealertrack saw increased adoption during the pandemic, with usage of Ready Sign rising by 135% from July to December 2020, Cox Automotive announced during the NADA Show this week. The number of deals signed with the platform, which enables customers and dealership staff to electronically sign documents, grew by 173%, while the number of eSign documents created on the platform went up by 233%.
Digital contracting is “top of mind” for lenders as customers seek to do much of the process remotely, said Andy Mayers, lender solutions strategist at Dealertrack. “[Lenders] know that for consumers to do a completely seamless transaction, they have to do a digital contract,” he said.
Auto dealers have been requesting more digital financing capabilities from their lender partners as the pandemic has shifted consumer shopping preferences. In a survey conducted by CU Direct in October during the Auto Finance Summit, 48% of 91 dealer respondents described e-contracting as a top priority, and 68% said loan pre-approval should be done digitally.
Contracting online will likely remain an integral part of auto lenders’ success moving forward, as 90% of dealers and consumers believe customers in 2021 will shop and transact online rather than in person, Randy Kobat, vice president for inventory management solutions at Cox, told Auto Finance News.
Still, not all lenders have embraced remote signing amid compliance concerns and the challenge of bringing e-contracts to mobile devices, Mayers noted. Of the nearly 1,500 lending sources on Dealertrack’s platform, a growing number — currently about 70 — including Ally Financial and Capital One Auto Finance, are now able to process digital contracts, he said.
Lenders who typically use a paper process are also looking for ways to work with dealers who use digital contracting, Mayers said. Bridging the gap is Dealertrack’s new Digital Contracting Choice platform, which allows lenders to access digital contracts and ancillary documents packaged by the dealer to use in their normal funding process.
“It’s a solution to enable our lending partners with a faster way to market instead of building a complex integrated solution,” Mayers said.
Auto Finance Innovation Summit, the premier event for technology in auto finance, returns March 16-17, 2021, as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2021 event and register, visit www.AutoFinanceInnovation.com.
