Vehicle Finance, Alternative Lending and Tech Innovation

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To kick-off 2018, the Center for Auto Finance Excellence released a list of seven innovative ideas for the industry. The list included biometrics, machine learning, car subscriptions and eContracting.

eContracting?! While we agree that technology is changing business models for lenders and dealers, we found it interesting that eContracting fell into the category of an innovative idea for 2018 as its benefits have been highlighted for over a decade. For instance, a 2006 Auto Dealer Today article states, “The eContracted system and all its components has quickly become a well-oiled machine, fully compliant and cost-effective. It’s time for all dealerships to get out of their comfort zone and to modernize their finance deal system. eContracting is here to stay.”

eContracting vs Digital Contracting

I firmly believe that the industry is moving to the next phase of innovation, which is a truly digital contracting experience. And while the term “eContracting” is commonplace, it is important to highlight that pioneers have moved to a fully digital contract experience including documents and data—from document preparation, to signature, to the secondary market.

While there is certainly room for greater adoption, vehicle finance leaders that have transitioned to eContracting (or digital contracting) are benefiting from improved customer satisfaction, increased speed to funding and reduced costs for shipping and storage. It is becoming the industry standard.

Here are two examples:

  • Westlake Experiences eContracting Success. Westlake has noticed the impact it has on originations and customer service, with its high rate of adoption. “[eContracted] deals now make up about 20 percent of our monthly originations,” said Mark Vazquez, senior vice president of sales and marketing. “We should see this ratio increase now that we have launched the solution nationwide.”
  • RouteOne Improves Dealer Experiences with eContracting. Our partner, RouteOne, is the industry leader in eContracting, booking more than 8.2 million eContracts to date. RouteOne has over 6,600 active eContracting dealers that have access to 40+ finance sources to deliver a variety of financing option. We agree with and applaud RouteOne Senior Vice President Jeff Belanger, who stated, “As eContracting becomes the standard, and not the exception when financing a vehicle, RouteOne’s goal is to make this service available for all financing scenarios.”

For dealers, having eContracting technology decreases the number of returned contracts and accelerates funding times.

Consumer Satisfaction Drives Alternative Financing

Last year, we were thrilled to begin working with Ally’s auto finance marketplace, Clearlane, to facilitate faster transactions and improve the customer experience with our digital signature and contract management technology. I recently came across an interview with Tim Russi, president of auto finance at Ally Financial that discusses the role of technology and why it is integral to the future of vehicle finance. In reference to integrating Clearlane into its business, Russi notes:

You want choice, and by providing choice and selection the consumer is going to be more satisfied and the experience is going to be one that they cross the goal line on, versus one where they go, “Oh, I got one proposal from one lender. I wonder if I can shop somewhere else and get a better deal.’ It’s all about the spirit of being able to allow the consumer to transact as seamlessly, within that one experience, that one touchpoint.

Looking to the Year Ahead

We live in a world where consumers demand 24/7 accessibility and instant gratification. It is without question that the vehicle finance industry has embraced eContracting and those that have moved away from paper-based processes are reaping the benefits.

Regardless of how a vehicle is purchased—online through alternative financing, via a car vending machine, with a subscription or at the dealership—a contract, whether signed with paper and pen, executed electronically or a complete digital package, is integral piece of the equation.

In 2018, I believe we will move beyond eContracting and see a clear shift to digital contracting.  If you haven’t embraced technology and today’s digital ecosystems, it’s time to get started. For more information about how to enhance your processes and operations through eContracting, please check out our webinar, Decoding Digital Lending for Vehicle Finance.