One of the ways some financial providers are streamlining the vehicle-loan process at dealerships is through e-contracting, a system that automates much of the work.
Many dealerships expect e-contracting to result in fewer rejected contracts, which can also boost customer satisfaction by eliminating returned trips to the dealership, fewer delays in processing, increased speed of cash flow through faster funding and long-term reductions in contract processing fees.
Despite the apparent upsides of e-contracting, the J.D. Power and Associates dealer financing satisfaction study finds that fewer than 10% of automotive dealerships are using this new technology.
The main reasons most dealers cite for not using e-contracting:
- Too few lenders currently participate.
- The technology is too new.
- Additional costs are associated with purchasing the software and hardware.
- Training requirements are associated with preparing dealership personnel to use the system.
“Many dealerships are hesitant to adopt e-contracting due to the costs, which can be very high, especially for the multi-lender systems and the training associated with learning how to use the platforms,” says J.D. Power researcher David Lo. “However, there is clearly value in e-contracting.”