Anyone with years of experience in lending knows paperwork has become voluminous as a result of new regulations. Paperwork is a deterrent to loan processing efficiency. When properly executed, paper provides a record all of the required loan information, terms, and agreements. However, a paper process is anything but fast and secure.
Fintech innovations of Contract and eSignature address paper’s shortcomings and create a better lending experience for all involved in the lending cycle: Dealer, lender, and borrower. For lenders with legacy loan origination systems, it can be a significant step forward to shift from paper contracts and signatures to eContracts and eSignatures. However, modern loan origination solutions that incorporate eContracts and eSignatures capabilities offer compelling advantages. eContracts and eSignatures enable lenders to process loans and deliver documents quickly and securely.
In the following discussion, we assume that all auto loan application information, including identification, employment confirmation, income, and other secondary information have been submitted digitally to the lender. We’re also assuming that applicant credentials have been evaluated and matched with one or more of the lender’s credit policies.
eContract eSignature Benefits
Fast Loan Origination
With eContract eSignature capabilities incorporated into loan origination, lenders streamline processes, reduce costs, and improve the probability of booking loans. High-volume lenders save time and money with each transaction. Multiplying individual savings by hundreds to thousands of transactions per quarter results in greater productivity and substantial savings. Key functions that speed your loan origination process include:
- Digitally managing all documents and processes, and eliminating any delays or physical handling associated with paper processes; including printing, faxing, mailing, and filing;
- Workflow management of the creation of contract documents, automatically populating documents with accurate borrower information, terms, and conditions, and ensuring required disclosures and notifications are included;
- Review and sign contract documents on a desktop computer or mobile device, allowing convenient and near-immediate confirmation of loan offers;
- Multiple methods available to record eSignatures, including typed text, image uploading, voice recording, or signature devices;
- Configuring eSignature workflows to support multiple signers and signatures, and directing signature routing and sequencing;
- Ensuring all documents have been properly reviewed and signed where required, eliminating any delays resulting from missing or unsigned paper documents; and
- Complying with The Uniform Electronic Transaction Act (UETA) and Federal Electronic Signatures in Global and National Commerce Act (ESIGN).
Secure Loan Origination
With eContract eSignature capabilities, lenders eliminate the security risks inherent in paper loan origination processes—particularly risks associated with signer authentication, process audits, and records retention regulations. Key functions that enable secure processes include:
- Multiple identity authentication methods for signers, including an email/security code, SMS text PIN delivery, and knowledge-based authentication using “out-of-wallet” challenge questions, such as “the model of your first car.”;
- Automatic tracking and auditing of all actions associated with the eContract eSignature process;
- Ability to securely manage all of the secondary digital documents and records associated with the transaction over its entire lifecycle. Eliminating cost and space required to store increasing volumes of paper loan documents;
- Establishing retention policies based on document type, including automatic calculation of document destruction dates; and
- Immediate and secure access to digital loan documents via simple search functions. Eliminating time spent searching through paper stored in file cabinets and/or banker’s boxes onsite or off.
Better Customer Experience
Improvements in process speed enabled by loan origination solutions that incorporate eContract eSignature capabilities let lenders address one of the most common complaints about the sales process—time tied up in financing paperwork. According to the Cox Automotive Car Buyer Journey 2018.
“Of the 3-hours average time spent at the dealership during the purchase process, half is spent negotiating or doing paperwork, resulting in a 46% satisfaction rate for how long the process takes. Among buyers who were dissatisfied with how long the process took, Negotiations and Financing/Paperwork were the top 2 areas that took longer than they expected.”
The eContract eSignature capabilities described above help accelerate the entire loan origination process via automation and greatly reduce the time involved with finance paperwork. Paper processes are eliminated. Loan information accuracy is virtually ensured. Offers can be acted upon in seconds. All steps of the process are tracked and required documents captured and retained digitally. Dealers, lenders, and borrowers all share in the benefits,
eContract eSignature and the Digital Evolution
Loan origination is evolving toward an entirely digital process, and eContract eSignature capabilities play a vital role. Lenders looking for every opportunity to improve lending efficiency and grow their portfolios in an increasingly competitive market will quickly recognize the value of incorporating eContract eSignature capabilities.
Take a detour for a few minutes to explore the advantages of digital auto loan applications and electronic contracts by attending the Building Your End-to-End eContracting Experience in Auto Finance webinar now.
defi SOLUTIONS’ loan origination software experts welcome the opportunity to discuss how we can help you incorporate eContracts and eSignatures into your auto loan origination process. Take the next step toward greater lending process efficiency by contacting our team today or registering for a demo of defi LOS.
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