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The defi Team defi INSIGHT, Digitalization

paper vs digital

Advances in fintech bring ever-greater efficiency to the auto purchasing experience. Cloud, mobile, and the wealth of automotive information available via the internet have been disruptive. As a result, consumers spend about 60% of the car buying process online doing research and less time at dealerships. However, when it comes to the actual purchase, consumers continue to complain about the time spent on negotiations and financing. 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.”

In the report, 64% of respondents indicated that financing paperwork took longer than expected. Based on these findings, the report recommends:

“Dealers should strive to shorten the deal-making purchase process – particularly through streamlining F&I paperwork and negotiations – in order to enhance customer satisfaction and improve loyalty and retention rates.”

Paper vs Digital

Loan origination paperwork is a major reason the process takes so long. Sure, most of the application information is captured online by a computer connected to a dealer management system, an indirect lender or captive lender. However, all too often information captured by computers is then printed, faxed, or enveloped and sent to the lender via post or express. Copies of driver’s license, proof of residence, and pay stubs are typically included in the package. Every step involving paper reduces lending process efficiency, adds to lending costs, and can introduce errors.

When comparing paper vs digital auto loan origination, there’s every reason to implement the digital process as soon as possible. There are big benefits for all parties—dealers, lenders, and consumers.  

Digital Benefits for Dealers

With digital auto loan origination, applicant information is captured via computer. Supporting documents—license, pay stub, proof of residence (POR)—are captured via scanner or mobile device. All information is digitally combined and securely sent to the lender for processing.

Digital auto loan origination immediately counters consumer complaints about excessive time spent at the dealership to finance their transactions. With less time required for loan applications, dealers can comfortably handle more sales, particularly during busy periods.  

Digital also reduces, if not eliminates, the potential for errors when submitting a loan application. Rules, data masking, image capture, and optical character recognition (OCR) help ensure that applicant information is entered correctly to support rapid decisioning by the lender.  

For the dealer, digital eliminates paper, printing, and mailing costs. Digital reduces loan application time and supports a better customer experience.

Digital Benefits for Lenders

The paperless benefits realized by dealers apply to lenders too. Arriving electronically, applicant attributes are quickly evaluated. Low-risk applicants with prime or better credit ratings qualify for auto-approvals and are offered deals within minutes. Responses to qualified applicants with lower credit scores can be reviewed by loan officers and, using auto-structuring, offer conditional approvals quickly to increase the likelihood of booking the loan. High-risk, poorly-qualified applicants who do not match any of your credit policies are immediately evaluated and auto-declined without spending a minute of any loan officer’s time.

Auto loan origination that begins digital stays digital throughout the entire process. Additional information that may be required (stipulations, verifications, email, etc.) is automatically captured and linked to the loan application, providing a comprehensive view of applicant credentials and the decisioning process.

Efficiencies of the digital auto loan origination continue with lenders creating digital contracts that can be reviewed and electronically signed on mobile devices.

In addition to the greater efficiency that digital auto loan origination provides, lenders simultaneously benefit from automatic retention of relevant documentation to meet compliance requirements.

Waste no more time fumbling with paper applications, re-keying applicant information, or misplacing critical documents. Handle a greater volume of loan applications without hiring additional staff. Eliminate paper, printing, and postage costs of contracts. Be compliant without the cost of storing documents in banker’s boxes on- or off-site. Digital brings greater efficiency to all lending decisions and improves your odds of booking more loans.

Take a few minutes to explore the advantages of digital auto loan applications and electronic contracting by attending the Building Your End-to-End eContracting Experience in Auto Finance webinar now.

Digital Benefits for Consumers

For applicants, digital auto loan origination results in a faster lending decision and loan offers. Well-qualified applicants, as well as applicants who don’t meet your credit policies, can have decisions returned in seconds. Digital means less time at the dealer spent on financing. Digital contracts and electronic signatures further reduce dealer time, contributing to a better customer experience.   

Getting Started

defi SOLUTIONS loan origination software experts welcome the opportunity to discuss how we can help you realize the quantifiable benefits of a digital 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.


Get in touch with us today and get a demo!


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