loan servicing software community bank small business


The defi Team Auto Dealers, Automation, defi CONNECT, defi INSIGHT, defi LOS, Digital Loan Documents, Digitalization, Simplifying Processes, Technology

loan servicing software community bank small business

The auto industry is recovering from the abrupt, early 2020 shutdown of the US when new sales dropped a whopping 38% before starting a bounce back. The recovery continues to impact the indirect auto lending trends of 2021. Demand for new and used vehicles is up and the factors contributing to this demand are dealer incentives, manufacturing short falls, low lending rates, migration from cities (mass transit) to the suburbs (car-dependent), and the K-shaped recovery that favors financially well-situated borrowers. 

The uptick in vehicle sales presents opportunities for auto lenders who can effectively respond to two specific indirect auto lending trends in 2021: 

  1. Offering a completely digital indirect lending experience
  2. Providing rapid decisioning that can significantly boost a dealer’s chances of moving a vehicle off the lot. 

The key to successfully delivering these trends lies within the underlying technology that eliminates time-consuming manual steps and paper transactions.

Customize Your Indirect Auto Lending Program Need to Meet Dealer Needs

Dealer expectations for indirect lending are focused on fast approvals for prospective buyers. To meet these dealer expectations, auto lenders need to offer an indirect lending experience that:

  • Has an intuitive user interface showing accurate rates and programs tailored to dealers’ buyer segments.
  • Allows a dealer to shop rates and programs using simple queries to find deals that match motivated buyers. 
  • Can quickly restructure existing deals online to obtain alternative financing options.

Provide dealers with an intuitive self-service portal that offers programs
and rates specifically tailored to the dealers’ market segments.

Streamline the Indirect Auto Loan Application Process

When the dealer and buyer agree on the vehicle price, the loan or lease application process should be equally streamlined. Dealers should be able to submit a completely digital application, including any required digital images of driver’s licenses, income statements, or employment confirmations. The most efficient lease or loan applications take only a few minutes. 

With modern loan origination software, a digital application can be reviewed and returned with an offer in seconds. Decision rules and workflow automatically apply credit policies to the application and eliminate manual tasks and processes. Prime and super-prime applicants can receive approvals and offers in seconds, all without the need for underwriter review. Applicants with lower credit scores can receive conditional approval with specific stipulations.

Boost Indirect Lending Opportunities Through Risk-Adjusted Terms 

Auto lenders who want to improve their ability to offer the best risk-adjusted terms should incorporate trended credit data rather than rely on traditional credit score snapshots. Trended credit data provides a more accurate assessment of a borrower’s current financial strength. Trended credit data can increase a lender’s chances of booking a deal by offering very competitive rates and avoid risk by declining applications that might otherwise have been approved based on traditional credit scores alone.

Make It Easy for a Borrower to Accept an Offer

Loan origination software that supports digital applications and rapid decisioning should also make it easy for a borrower to review and accept an offer. Offers can be delivered as e-contracts and reviewed online via desktop or mobile device, eliminating any delays associated with paper. Furthermore, e-contracts that support e-signatures allow for the immediate acceptance of terms and conditions. 

Encourage Dealers to Do Business With You by Implementing the Latest Indirect Auto Lending Trends

You’ll differentiate yourself as a lender when you offer a completely digital lease or loan application process, rapid decisioning, and digital confirmation of the offer. You’ll further impress dealerships when you can tailor your indirect lending program to the needs of the market segments they serve. But perhaps most importantly, it distinguishes you as a local lender who’s on top of the latest indirect auto lending trends that make it as easy as possible to obtain financing. There’s no better way to take advantage of the new indirect lending opportunities made available by the increased demand for new and late-model vehicles.

Getting Started

defi SOLUTIONS’ online defi CONNECT product brings together dealers, lenders, and borrowers and integrates with defi’s flexible, scalable, end-to-end loan and lease origination solutions. If your current lending software doesn’t allow you to take advantage of the indirect auto lending trends and opportunities presented by the economic upswing, take the first step in realizing the benefits of modern technology. Contact our team today or register for a demo.

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