The ability to handle auto financing online is one of the past decade’s greatest innovations for lenders. Gone are the days of managing complex spreadsheets by hand or keeping hundreds of paper documents in a dusty back office filing cabinet. With modern and innovative software solutions, you have access to the most essential information in one end-to-end cloud platform. From auto loan origination to loan servicing, you can do it all online these days.
One potential complication of this tech evolution is that there are a variety of software types to choose from, only some of which are right for your lending needs. To help you transition into auto financing online, we’ve put together a list of the five most important capabilities you should look for in a reliable auto financing software solution.
Why You Should Transition to Auto Financing Online
It’s easy to get stuck in a rut. Some lenders are used to performing the same workflow day after day and rely heavily on their underwriters to handle every step of the auto lending process from start to finish.
While there’s nothing wrong with having a routine, it’s also important to take advantage of new digital lending technology that can make the lending process run smoother, faster, and more efficiently. With the right software solution, your underwriters and other in-house staff will spend less time on tedious tasks that can be done faster and more consistently by a computer.
There will also be a reduced risk of data loss and the elimination of information silos. There are a lot of moving parts in the auto lending process, so utilizing a software solution capable of managing it all can be a huge benefit to lenders, particularly those with limited staff and resources.
Making the transition from a manual process to auto financing online could be one of the best decisions for your business. An auto financing software solution works by:
- Collecting and storing important data.
- Establishing a platform and user portal for loan officers or customers to access information or perform tasks.
- Providing a powerful decisioning engine for automated decisioning or manual review.
- Offering configurable reporting and data analysis on every auto loan.
- Identifying patterns in loan applications, loan structures, payment schedules, collections processes, customer service, and more so you can reduce risk and fix potential problems.
- Managing the entire lifecycle of auto loans from origination through payoff.
The exact role of an auto financing software solution in your process varies depending on which software you choose. For example, some software options only provide a niche service, such as automated application decisioning. While this could make life easier for your loan officers, as they’ll spend less time sorting through applications by hand, it’s only a narrow solution to one challenge.
To fully transition to auto financing online, you need a software solution that considers the whole picture and provides far-reaching solutions to your business’ most pressing needs.
5 Important Software Solution Capabilities You Need
Having a single software solution that provides a range of capabilities is important because you’ll not only get more bang for your buck, but you’ll also reduce the risk of creating data silos. Sometimes, when you use multiple software subscriptions and applications on disparate platforms to address different pain points throughout the auto lending lifecycle, these tools don’t communicate effectively with one another. This could lead to data loss, incomplete or misleading data analysis, and even an increase in lending risk.
To reduce miscommunications and safely transition from a manual process to auto financing online, you should look for a software that includes at least all five of these capabilities:
|Must-Have Software Capabilities||Why You Need Them|
|✔Automation||Automation saves time, effort, staffing requirements, and also makes your financing process more consistent. In a manual process, there can be inconsistency among which applications loan officers approve or deny. Automated decisioning resolves this issue. You’ll capture more promising applications and reduce the number of approval or denial mistakes.|
|✔Configurable decisioning rules||Configurability is just as important as automation. You can create multiple decisioning rules that are dependent on various criteria, such as traditional credit scores, alternative credit data, or other factors based on the applicant’s unique situation. This allows you to loan money to trustworthy applicants that have trouble financing vehicles from lenders who only use traditional loan structuring and decisioning rules.|
|✔Detailed financial reports||Because all your data is stored in a central repository, it’s much easier to generate financial reports, including account management information, payment tracking, collections statistics, and other metrics your stakeholders need to see. You can then use these reports to identify and address flaws in the system.|
|✔Accurate risk modeling||Software that uses artificial intelligence and machine learning to model risk can help you avoid going through a time-consuming collections or repossession process. While the system can’t capture every potential risk, this technology may help you structure loans and approve applicants that are less risky than if you were to manage risk factors manually. It could help you identify hidden risks you may not have known existed.|
|✔Fast and informative notices||Customer care is an important part of the auto lending process. With modern technology, you can provide borrowers with financial reports, payment schedules, payment confirmations, and other important notices without asking your staff to draft these documents. You can also program the software solution to automatically send out notices in response to missed payments or borrower inquiries.|
This isn’t a comprehensive list of all software solution capabilities you should seek out when you transition to auto financing online. However, this should help you narrow down your potential list of software vendors so you can choose the right partner for your lending and financing processes.
How to Find a Software Solution That Addresses All of Your Needs
A one-size-fits-all software solution doesn’t always work for some auto lenders. That’s why configurability is one of the most important qualities to look for in an online financing system. For example, lenders often do direct business with customers, but indirect business with vehicle dealers. They need a software that allows customers to apply directly on the lender’s website as well as features to support dealers specifically. Configurable software also allows lenders to offer prequalification campaigns where they can identify whose vehicles are close to being paid off and mail special offers to these customers.
With configurable rules, you can decide when to approve each type of borrower. You can even flag applications for manual review if they fall under a gray area in your decisioning rules. This allows you to provide financing to borrowers that some of your competitors may overlook; you could corner the subprime market in your region, for instance. And, with the right software solution, you’ll also be able to project potential lending risk with each new decisioning rule you add, creating an extra layer of security for your business.
It’s time to embrace the future of auto financing. Find a software platform that gives you full control over your origination, financing, and servicing processes.
defi SOLUTIONS is an auto lending software solutions vendor that provides configurable, end-to-end solutions to your needs. Our focus on automation, configurable rules, reporting, risk modeling, and customer service allows you to offer competitive loans to borrowers while reducing risk. To see our software solutions in action, contact our team today or register for a demo.