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IS LEASE AND LOAN OUTSOURCING GOOD FOR AUTO LENDERS?

The defi Team defi INSIGHT, Managed Servicing, X-Business Process Outsourcing

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Auto lenders are always seeking ways to adapt, stay competitive, and reduce expenses. One way to do that is by using lease and loan outsourcing. When the primary goal is to cut costs, gain more free time, and focus on core aspects of the business, it is a desirable option. But is lease and loan outsourcing good for your business?

A recent report from Statista shows that 59% of businesses currently use outsourcing to cut costs—and have been successful. Most auto lenders prioritize cost-cutting as the basis of their decisions, but there is more to outsourcing.

This article will compare the pros and cons of lease and loan outsourcing for auto lenders and the importance of choosing the right partner.

Is Lease and Loan Outsourcing Good For Your Business: The Pros and Cons

Deciding to outsource is not something to take lightly, especially if you are unsure which provider can help you. Before deciding, it is critical to understand both sides of the lease and loan outsourcing argument—the pros and the cons. Lease and loan outsourcing is good for auto lenders, but consider the following criteria while making your decision.

Pros and Cons of Lease and Loan Outsourcing
Pros Cons
More Available Resources: Lease and loan outsourcing providers have the technology, staff, and processes to improve efficiency and workflows, freeing up resources. Shared Control: When you outsource loan processing, you share control of how tasks are monitored and carried out.
Reduced Cost: You no longer have to battle with fluctuating loan or call volumes, reducing overhead expenses and resulting in more predictable operational costs. Hidden Costs: Most lease and loan outsourcing partners can help you reduce overhead expenses, but they may also charge hidden fees.
Scalability: Outsourcing helps you scale your business quickly without the hassle of expanding in-house departments or investing in additional equipment. Loss of Focus: The work you send out to lease and loan outsourcing providers may not receive the attention it deserves, which can be detrimental to your business.

The Pros of Lease and Loan Outsourcing

#1 More Available Resources

Auto lenders often have limited resources to manage all processes in-house. Lease and loan outsourcing providers have the technology, staff, and processes to facilitate improved efficiency and workflows that eliminate manual tasks. There is no longer a need to maintain space for employees to handle processes, pay employees to work in those departments, or upgrade your technology when a provider can take over some or all of the responsibilities. Some examples of these available resources can include:

  • Technology and integrated systems that manage accounts receivable with payment processing and accounting systems that ensure real-time updates.
  • Highly trained, multilingual customer support agents that provide white-label customer service. Lease and loan outsourcing providers can also have staff that is available 24/7 if needed.
  • A dedicated team of professionals focused on shortening turnaround time and maximizing the resale price of off-lease and repossessed vehicles.

#2 Reduced Costs

In addition to having more available resources, an optimal lease and loan outsourcing partner can easily adjust these resources to be increased, decreased, or modified according to lending cycles to maintain set processes and meet compliance regulations. As a result, lenders no longer have to struggle with changing loan or call volumes, reducing or expanding overhead expenses, resulting in more predictable operational costs.

#3 Scalability

If your business is rapidly growing, outsourcing allows you to scale your processes quickly without struggling to expand departments in-house. Consider your provider to be another hand, voice, and brain available to provide excellent service that makes for repeat customers.

The amount of loans has increased significantly in recent years, as well as defaults and repossessions. Auto lenders tend to have smaller operations, limiting the ability to handle the increased volume of borrower needs. Choose a partner that drives your scalability and does so with professional, white-glove service.

The Cons of Lease and Loan Outsourcing

#1 Shared Control

As you might expect, outsourcing means sharing control of processes—how tasks are monitored and performed. It is highly recommended that you seek out a trustworthy lease and loan outsourcing provider that is entirely transparent. Someone like defi SOLUTIONS is dedicated to creating and delivering market-leading services that give lenders access to see how borrowers are performing while improving borrowers’ experiences with shared control of the process.

#2 Hidden Costs

While most lease and loan outsourcing partners will help reduce your overhead expenses, they may surprise you with hidden fees. A contract should define all costs, but unfortunately, not all partners are entirely transparent. If they do include everything, it could be in the fine print of your contract, so read carefully.

Pricing should be one of the first topics of discussion upon consultation. Be wary of providers that give you an “all-or-nothing” price as well. Services should be customizable and tailored to your specific needs. White-label providers allow you to outsource one, a few, or all processes.

#3 Loss of Focus

One major disadvantage of outsourcing specific tasks is the risk of misaligned schedules and focus points. It might be challenging to synchronize schedules to ensure you receive what’s promised on a reliable, predetermined timeline.

Many outsourcing providers often serve multiple clients at any given time, and you are not necessarily on the top of their list. As a result, the work you send out may not receive the attention it deserves and can be detrimental to your business, especially if you decide to outsource to more than one provider. It is highly recommended that auto lenders choose a single-source loan outsourcing

Making the Right Decision

When the decision is made to outsource processes, auto lenders will find that the quality and extent of lease and loan outsourcing services significantly outperform anything managed in-house with the right partner. However, you can mitigate the challenges with the right provider, so be mindful of your selection.

Providers such as defi SOLUTIONS focus on the lending industry, offering essential services and flexibility that can be tailored to your business needs. Benefits such as agility, scalability, reconfigurability, stability, compliance, and innovation can be found in one company.

If you are looking for an industry-leading lease and loan outsourcing provider that offers professional, white-glove service, look no further than defi SOLUTIONS. Our defi MANAGED SERVICING provides a single hub, digital interactions, and intelligent virtual assistants to bring everything together.

With defi MANAGED SERVICES, you can ramp up a new or beef up your existing loan servicing operation with white-label, outsourcing services for:

  • Inbound call handling and fulfillment
  • Return mail processing
  • Payment processing
  • Collateral management title work
  • Accounting
  • Cash management
  • Back-office payment processing
  • Default management (collections, bankruptcy, repossessions, recovery)
  • Lease maturity management
  • Remarketing

defi MANAGED SERVICING uses artificial intelligence (AI) and Contact Center as a Service to boost operations and processes related to auto loans, leases, and leased vehicle dispositions, reducing budgetary expenses and improving customer service.

Getting Started

defi SOLUTIONS is redefining lease and loan outsourcing with end-to-end software solutions that enable lenders to automate, streamline, and deliver. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi MANAGED SERVICING, lenders can improve operations and processes related to auto loan servicing, leases, and the disposition of leased vehicles, cutting expenses through automation and outsourcing services. So, is lease and loan outsourcing good for your business? When partnered with defi SOLUTIONS—it is. Contact our team today and learn how our cloud-based loan origination products can transform your business.

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