F&I tip: Paper auto loan holdouts ‘need to get going' on digital

Auto lenders are going digital, according to an executive for e-contracting support company Wolters Kluwer — and dealerships should, too.

"If you haven't started on a digital journey, you need to get going," said Tim Yalich, Wolters Kluwer head of automotive strategy.

A couple of captive auto lenders have adopted "a stick approach" to the process, Yalich said. "If you're still executing car loans on paper, they're going to charge you to process the paper," he said. Lenders can't get the return on investment on their internal efficiency spending without dealers going digital, he said.

Yalich said lenders are showing significant attention to their back-end processing with an eye for gains such as faster funding and automation of the "look to book" process, in which the lender evaluates the loan proposed by the dealership and decides whether it wants to buy on those terms.

"You need to be in an arena where you can process things digitally" to preserve relevance and move auto loans, he said of dealers.

Some small independent dealerships might not have enough volume to justify a major investment in digital auto finance, Yalich said, but less expensive options exist, such as electronic signing, to meet lenders in that space.

"The investment we see happening on the backside is going to force the front side to go digital," Yalich said.

Have a good auto finance and insurance tip to share? Email Automotive News F&I reporters John Huetter at [email protected] and Paige Hodder at [email protected]. See more F&I tips at autonews.com/topic/fi-tips.