As competition in the automotive industry grows increasingly fierce, more and more industry professionals are looking to technology to gain the advantage over their competitors. Foremost among these technology-based strategies is electronic contracting (e-contracting), which has been steadily gaining momentum among auto lenders and dealers in recent years.
Simply put, e-contracting is a paperless system that greatly speeds the funding process. It gives a dealer the ability to forego paper contracts, submitting an electronically signed contract using signature pads to capture customer signatures. The computer-driven delivery system also transports Electronic Retail Installment Sale Contracts, or ERISCs, effectively replacing the paper-based Retail Installment Sale Contracts (RISCs).
However, this technology represents more than increased efficiency: it represents a greater measure of security for both dealership and customer alike.
Why E-Contracts Are Good for Dealers
E-contracting enables dealers to greatly reduce – and in many cases, nearly eliminate – contracts in transit. Fewer CITs means better cash flow. The process is accomplished electronically, safely and securely, and with lightning speed. Increased efficiency and productivity have a direct correlation to cost reduction, which translates into greater profitability.
Deals are closed more quickly, and with fewer mistakes. E-contracting bundles all the necessary documentation into one package, which assures that only complete, properly compiled loan packages are sent off. In addition, most e-contracting systems have default settings for various fields. For example, the field for the borrower’s name may be set to reject any entry with non-alphabetic values. So, any entry made which deviates from the set parameters would trigger an error message. This can help screen applications for typos prior to submission.
There is no more waiting for approvals to arrive by fax, no more overnight FedEx packages leaving the dealership, no more unhappy customers returning to the Finance office to re-sign paperwork.
In the fast-paced world of the automotive marketplace, saving time can mean saving the deal. Current market conditions mean that customers have greater power than ever, and they are fully aware of it. If their contract is delayed, or of they are faced with the aggravation of having to return to the dealership to re-sign a corrected contract, a customer may simply opt to walk away all together. An unsigned contract is a contract that can still fall through.
Even if the customer agrees to return to the dealership to re-sign, the dealership may still suffer for the customer’s inconvenience. While the deal may ultimately go through, the delay and aggravation the customer endured is likely to negatively impact CSI. Even if the delay or error was through no fault of the F&I office, the customer’s opinion of the staff’s professionalism will be tarnished.
Tags: E-contracting, f&i