Fintech innovation is reshaping auto financing into a streamlined customer experience, as Boston Consulting Group (BCG) notes in Staying Ahead as Auto Finance Goes Digital. A streamlined digital loan origination process improves your chances of capturing loans. It does so by eliminating needless delays caused by paper documents and inefficient manual underwriting steps. It also keeps all parties in the loan origination process current on loan status using digital notification strategies.
Digital Notification Strategies
The best digital notification strategies use several processes and tactics, including:
- Automation and Decision Rules;
- Auto Structuring;
- Integration with Dealer Management Systems (DMS);
- Email and Text; and
- Online or Mobile Applications.
Automation and Decision Rules Notify Applicants in Seconds
Automation and decision rules let lenders respond instantly to superprime and subprime applicants. When credit scores of (less than 580 or greater than 799) are the first filter for loan approval, automation evaluates applicant credentials and applies decision rules to determine next steps in the origination process.
Superprime applicants are offered the best rates and sent an econtract for review and signature. Subprime applicants who fail to match credit policies automatically receive adverse action stating the reason(s) for the decline. In both cases, decision rules eliminate the need for an underwriter to review the applications. With loan digital applications originating via a dealer, online or mobile, applicants can be instantly notified—good news or bad news—regarding the status of their application.
Auto Structuring Quickly Notifies Subprime Applicants of Options
In the case that a subprime applicant fails credit policies, but has other attributes that indicate worthwhile risk, auto-structuring can apply a set of decision rules iteratively to modify terms (increase down payment by $1,500, increase term to 60 months, increase rate, conditional approval based on verification of past 2 year’s income) with the goal of matching one or more credit policies. Here too, automation and decision rules eliminate the need for an underwriter to review and structure a deal. With auto-structuring a lender can offer a subprime borrower several loan options, giving the applicant a stake in the decision and increasing the likelihood of booking the loan. When auto-structuring fails to solve for a match it returns an auto-decline based on the requested deal structure. In both cases, automated decisioning and notification streamline the application process.
DMS Integration for Notifying Dealers & Applicants of Next Steps
In the event that automation, decision rules or auto-structuring fail to return an immediate decision and the application moves to an underwriter’s queue, loan origination can nonetheless be expedited via timely communication between lender and applicant or dealership. When an LOS is integrated with a dealer management system, lenders can send updates to dealers in real time. This keeps the dealer and applicant informed regarding loan status, requests additional information associated with any stipulations, offers alternative deal structures, and most importantly, lets the applicant know the lender is actively working to structure a deal that matches their financial need.
Notify Applicants Through All Channels
Email and text should be part of a lender’s digital notification strategy. Regardless of how the channel—dealer, online, or mobile—the applicant used to initiate the loan application, lenders can keep applicants informed of the status of a loan application using email and text messages. Automation can compose an email and text message and send it to the applicant whenever additional information is required, as with stipulations. Proactive communication can accelerate the loan origination process by contacting applicants, getting a prompt reply, and moving the deal to closure. Upon loan approval, lenders can immediately inform applicants via email and text and include the econtract to make the digital lending process as smooth and convenient as possible.
Notify Your Lending Team of Loan Status
In cases where the loan originations are tracked by management or sales representatives, you can notify these professionals via iPhone or iPad. Mobile tracking gives lender representatives access to loan approval status and loan specifics. Important real-time details, including sales price, interest rate, terms, LTV, PTI, and the estimated probability of close are all available in real time.
Digital Is Transforming Loan Origination
A digital lending process benefits both lenders and borrowers. Lenders achieve greater efficiency throughout all steps of the loan origination process—automation and decision rules enable rapid responses to loan applications. With digital notification, borrowers are proactively informed of the status of their loans. In the event additional information is required, there’s no delay in notifying the applicant. Digital is transforming the loan origination experience, and a digital notification strategy plays a critical role in that transformation.
defi SOLUTIONS software delivers a digital loan origination experience. Learn how integration with dealer management systems, automation, decision rules, and digital notification capabilities give you better chances at booking more loans. Start by contacting our team today or registering for a demo of defi LOS.
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