THE ONLY AUTO LOAN ORIGINATION SOFTWARE YOU WILL EVER NEED

Lenders who use a modern, cloud-based software solution have an advantage over competitors still using traditional paper processes or even legacy systems when it comes to auto loan originations. Such a loan origination system (LOS) streamlines the entire origination process while enabling auto lenders to more efficiently manage their workflow through pre-qualification, loan origination, credit assessment, and handover to those who service the loan. Relying on manual processes and legacy software makes the application process unnecessarily complex and time-consuming, which in turn can lead to frustration that lowers satisfaction among customers.

Using a financial technology (fintech) provider to migrate manual processes to a cloud-based platform will in turn improve efficiency, enabling lenders to concentrate on growing their loan portfolios rather than pushing paper. Regardless of how long or well-established a lender is, automation helps simplify the process of applying for an auto loan. Originations are the first phase of a borrower’s journey through the end-to-end loan process, so ensuring a customer has a good experience is integral.

Auto Loan Originations: What to Look For in a Software

An auto lender should look for an LOS that decreases turnaround time and improves productivity. By automating the origination process, lenders serve both their own and their customer’s interests. But before choosing a fintech solution, there are numerous factors that need to be taken into account so that lenders make the best decision for their business.

Auto loan originations solutions should consider:

• Need for compliance
• Automated decision rules
• Risk-based pricing
• Flexibility of the platform
• Multi-channel solutions
• Configurability of software
• Payment methods

While there are other factors that should be taken into account, using the above list is a good starting base. Now let’s take a deeper look at the importance of each of these considerations.

Assisting Compliance

On its own, software won’t ensure compliance with rules, regulations, and legislation regarding auto loans. Originations platforms greatly assist lenders, however, offering a means for storing digital copies of key documentation needed to maintain compliance.

This includes:

• Disclosure documents
• History of transactions
• Loan application denials
• Measures used to offer less favorable terms
• Notices for adverse actions
• Preauthorization for electronic fund transfers
• Regulations for loans contingent on risk-based pricing

Additionally, software should be able to automatically generate appropriate notices to customers when necessary for compliance purposes.

Automated Decisions

While automating processes generally improves a lender’s efficiency, automating decision-making particularly streamlines originations. Automating decisions allows lenders to provide applicants with excellent credit with near-instant approval while denying those with poor credit ratings outright or flagging those that need further review. Utilizing machine learning algorithms and artificial intelligence (AI) technology, a modern LOS helps lenders evaluate applications to properly understand the risk each applicant presents, speeding up underwriting and even identifying possible fraudulent applications.

Pricing Based on Risk

Facilitating the pricing of loan terms that gels with an auto lender’s credit policies requires that the LOS be easy to reconfigure to deal with changing policies or regulations. Such a pricing setup offers lenders greater flexibility, allowing lenders to configure unique parameters in order to find the best pricing for an auto loan. Originations software should recommend prices based on each applicant’s risk while also conforming to the lender’s pricing strategy.

Product Flexibility

Auto loan originations platforms should allow plenty of flexibility in the products lenders can offer customers. For example, an LOS should enable lenders to reconfigure their systems to deal with changing regulations or market trends. It should allow easy changes to customer status while also allowing lenders to easily compare rates on their products in comparison to competitors. Along with being easy to configure, these product offerings should also allow easy integration to other addons that help a lender offer better service.

Pre-Integration

An up-to-date, configurable LOS supports an auto lender’s requirements for expanding future operations. This involves giving lenders the tools that allow them to connect to other data sources to increase lending opportunities, as well as digitizing certain processes to streamline workflow and improve customer satisfaction.

Pre-integrated /capabilities of a LOS should include:

•  Alternative credit data
• Cloud-based digital documentation
• Electronic signatures and contracts
• Fraud detection
• Traditional credit bureau data
• Vehicle valuations
• Verification of employment, identity, and income

Lenders should look for an LOS vendor able to offer these and other capabilities already integrated into the system.

Multi-Channel Triggers

Another critical aspect of a well-designed LOS allows lenders to communicate with their customers in real time, utilizing their preferred communication channel. Responses can be automatically triggered to send information concerning a lender’s products when a decision on a loan is made.

Consumer banking channels include:

• Email
• Fax
• In person communications (at dealer or branch)
• Mobile texting
• Telephone
• Web chats

Lenders can make their transactions more efficient by simplifying how communications about auto loans are received, analyzed, and processed. This helps lenders to more quickly process an auto loan. Originations platforms that utilize such multi-channel triggers facilitate quicker turnarounds while also ensuring transactions are processed more dependably and accurately.

Straight Through Processing

As an electronic means of payment, straight through processing has enabled ecommerce by allowing online purchasing of products and services. Its use by auto lenders helps facilitate loan payments, and a servicing system that supports these electronic payments creates a more dependable payment system for auto lenders. Traditional payment methods involve numerous departments and could take days to go through. Straight through processing allows payment via credit card or even through fintech applications like PayPal. When used within a servicing system, straight through processing of payments enables customers to purchase an auto lender’s products online with just a few clicks. It helps facilitate sales of a lender’s products by allowing payments through a single point of sales.

How defi SOLUTIONS Can Help With Auto Loan Originations

It’s no longer necessary for lenders looking for a new auto loan originations solution to make tradeoffs between configurability, flexibility, reliability, and scalability. With defi’s originations systems, defi SOLUTIONS brings together the very best traits a LOS can offer.

For auto lenders, defi ORIGINATIONS:

• Allows alterations of business models to adjust to new market conditions.

• Enables additions to their customer base and product offerings without negatively affecting response times for customers.

• Permits configuration of the LOS to meet their unique needs without the need for programming skills.

• Supports quick response times and facilitates greater uptime to keep workflows going and customers happy.

For lenders, defi’s originations is flexible enough to run fintech on a single platform, regardless of the tool being used. With defi’s LOS, lenders can also easily scale their operations for both current and future market conditions.