How to transition to digital lending to enhance efficiency, reduce errors, and boost profitability for dealerships and lenders in the luxury vehicle market.

By Chet Heughan
4 min. read

Manual Lending

You might think getting a sale is the biggest hurdle when selling luxury products like RVs, powersports vehicles, or marine vehicles. But securing a customer’s buy-in is often the easiest part of the sales process.

It’s the next step — getting the deal funded — where many sales lose profitability. This is due to the inefficient and outdated consumer lending practices many dealers and their lender partners have, specifically with the use of traditional paper-based systems in our tech-oriented world.

Customers want to own the vehicle of their dreams, dealerships want to sell their inventory, and lenders want to finance these deals. Having an inefficient, disjointed consumer lending process means both dealers and lenders risk losing revenue.

Why Is Manual Lending Problematic?

Traditionally, consumer lending is an arduous task that involves manual data collection, a labor-intensive review of applications, and frequent errors and delays. The whole process heavily depends on how accurate data is and how efficiently it’s transferred between departments.

Any issues at any step can delay the process by days or even weeks. Some of the biggest flaws in the manual consumer lending process include:

• Customers must physically provide documents (driver’s license, paystubs, proof of residence, etc.) just to start the process.
• Completion depends on all parties submitting documents on time and error-free.
• Compliance requires using the latest forms for transactions, which can change by lender, year, or state.
• Manual review of creditworthiness takes as long for simple as for complex applications.
• Time spent reviewing applications is wasted when a customer is later deemed ineligible.
• Lack of synchronization between systems creates inefficiencies and risks.
• Multiple manual data entries by both dealer and loan officer increase errors.

Overall, paper-based lending is tedious and consumes time, labor, and money — not to mention resources wasted on deals that fall through.

The Best Financial Institutions Are Going Digital

In 2022, McKinsey & Company released data showing top performers in financial services had over 30% revenue growth, compared to 5% for average performers. These top performers had over 90% end-to-end digital ecosystems, while average performers had only 30-35%.

By embracing technology, top performers improved operational excellence and increased profitability. This has created a widening gap between top and bottom performers, where the cost of not embracing technology is falling behind competitors.

Almost 60% of consumers are willing to pay more for parts of a sale offered online — such as reviewing and selecting F&I products or signing paperwork digitally. Adopting new technologies will streamline your lending process and increase profits, whether you’re a dealer or lender.

The Automation Advantage

With automated lending workflows, you can streamline credit analyses or loan approvals. Automation reduces the labor burden of forms management and delivers a better customer experience.

For example, a dealer solutions consultant at Volkswagen Credit shared how eContracting reduced document processing time by two-thirds and cut 23% of package reworks.

Automation allows dealers and lenders to:

• Digitize forms management to fill out the right documents quickly and accurately.
• Eliminate human error and reduce recontracting rates.
• Provide customers a quick, convenient application process at their own pace.
• Reduce time spent reviewing credit applications while improving accuracy.
• Stay in compliance through automated forms management.
• Create a centralized data network between dealership and lender to maintain consistency.
• Lower the amount of contracts in transit, accelerating payments and freeing time for more important deals.

Final Thought

Manual lending is time-consuming, labor-intensive, and fraught with errors. Digitization and automation save time, resources, profits, and improve customer relationships.

Whether you’re a dealer or a lender, now is the time to automate the lending process and make your business more profitable and competitive.