Although electronic contracting has gained traction, it’s still not widely embraced by dealers.
Why? Confusion is standing in the way.
Companies define e-contracting differently. It won’t be desired or embraced until the industry develops a standard definition.
To get dealers on board, the industry needs to use the same dictionary.
There has to be a “common language” when discussing e-contracting, said Ron Greer, vice president of provider services at Provider Exchange Network, a division of Open Dealer Exchange that integrates dealer systems with insurance providers’ forms.
“E-contracting” is often used as a blanket term for any process involving electronic documents in the F&I office, but there are actually different levels and purposes for digital and electronic operations in F&I.
Provider Exchange Network defines e-contracting for F&I products as insurance contract origination. F&I managers use a digital deal jacket with all the electronic forms already in place. Insurance providers electronically verify and accept the contract before the customer leaves the dealership.
Some other processes defined as e-contracting end after the customer signs. But the customer is not actually covered until the F&I manager verifies the contract with the insurance provider.
On the lending side, an e-contracted transaction would also have a retail contract or lease agreement that is e-signed, sent to the lender and electronically vaulted, which means securely stored and transferred, said James Maguire, director of product marketing for CDK Global.
There are other levels to digital F&I that are sometimes confused for e-contracting, when actually, they’re just steps in the process.
CDK Global calls its levels of electronic F&I procedures Digital Contracting -- as a branded name.
But there is a subhead also called digital contracting, which is when F&I managers scan documents into a digital deal jacket that allows them to share, using a secure site, all the documents related to their transactions, instead of handing them a packet of paper on the way out.
With digital contracting, customers provide an electronic signature on a signature pad or tablet. The signature replaces a wet signature and shows acceptance and acknowledgement of the deal.
A digital signature, on the other hand, incorporates encryption technology to ensure the integrity of the e-signature. It’s authentication that the customer has approved the transaction.
Steps with similar names, which vary depending on who you ask, can make the process puzzling for dealers. There is a generic definition for e-contracting, Maguire said, but no detailed, industry-standard definition.
Many lenders, insurers, dealership groups and automakers are pushing dealers to adopt e-contracting with pilot programs, or they’re starting dealers at one of the midlevels. To move forward, there have to be more explanations and generally accepted terms.