More and more dealerships are using e-contracting for processing auto financing, but it is still too new to see widespread use.
Online loan-processor DealerTrack Inc. touts e-contracting's benefits, including the elimination of contracts in transit, fewer resubmissions due to missing signatures, less paperwork and faster loan approvals.
“It will become the rule, not the exception but it is taking some time,” says Richard J. McLeer, DealerTrack's vice president of lender and business development.
He says it is hard to get some finance and insurance managers to change their ways, substituting paper and pen for electronic forms and signature pads.
Not aiding the cause: many dealerships have high staff turnovers, and rookie employees are unfamiliar with the new technology. “They don't know how to use it. They need training,” McLeer says.
Getting e-contracting up and running is tough and most people “don't get it in the first run-through,” but “when it is functioning as it's supposed to, it has no disadvantages,” he says.
Paul Rindone, a vice president with ADP's dealer services division, says, “The value of e-contracting is strong enough to eliminate the barriers.”
Before e-contracting is commonplace at dealerships, there must be a “critical mass of lenders” and “the process needs to fit with the way dealers want to sell cars,” Rindone tells an F&I Management and Technology conference.
“To change to e-contracting, a dealer has to believe in its value,” he says. “The dealer has to believe in it enough to see it through to adoption. Having all documents electronic will bring a lot of efficiency.”
But that is “years, not months” away, he says.
“There is a need to quantify the numbers,” says Marguerite Watanabe, who leads Benchmark Consulting's auto finance group. “How fast is it? How does it help the bottom line? What will e-contracting do to help consumers?”
For now, many financing sources are taking a “wait and see” position, she says. “They are looking at big firms to do it first. There is a lot of room for growth.”
Although some dealership personnel resist the changes, McLeer says many forward-thinking dealers are pushing for e-contracting.
E-contracting must account for more than 50% of business to justify a changeover to it, says Mike Jurecki, CEO of RouteOne, an online consortium of lending sources.
“It has a bright future,” Jurecki says. “It will be the standard of the industry. It's just a question of how long it will take to get there. I wouldn't be surprised if, three years out, more contracts are e-contracts than not.”