Despite the promises over the last few years about the eventual coming of e-contracting, most F&I managers still use those archaic dot matrix printers. So what’s the holdup? Well, the industry is in need of quite a few “-tions,” namely integration, standardization and cooperation. These three needs must occur at various degrees between third-party providers, lenders, government agencies and dealerships. But in order for this to happen, it must become a valued part of the sales and F&I workflow. It must also meet each lender's compliant document requirements.

The term “e-contracting” has been a buzzword for some time, but current paperless processes are being performed with widely varying degrees of automation. There are legally prescribed document format types that can only be delivered via physical paper. There are also lenders that will not accept electronically generated documents. On top of that there there are dealerships that are reluctant to accept major process changes.

The benefits of e-contracting have been well publicized. For dealers, e-contracting promises to eliminate one of the chief complaints among their customers: the time it takes waiting to get into the F&I office, as well as the time spent in the F&I office. Expeditious loan closings via one-click document production (where the documents are produced and filed properly) offer greater opportunities to improve a dealership’s CSI. In addition, the possibility of the customer walking out of the dealership with a more uniform, professional-looking set of sales and loan documents will definitely boost the dealership’s image.

Other benefits include faster funding since e-contracting aims to reduce document errors. There are also cost savings, including the elimination of delivery costs. It also promises to make securitization easier, as well as streamline servicing by creating cleaner loan packages that the lender can electronically vault.


Even though there are no true paperless e-contracting solutions in the market today, a dealership can still gain advantages by establishing a relationship with a strong industry provider; one that can supply compliant loan documents through its system electronically. This allows a dealership to eliminate the stockpiling or the warehousing of documents. It also eliminates the need for a dealership to keep up with revision dates on compliance-related documents.

Whatever provider you choose, it should be able to validate certain contract and ancillary document data through its system. Items such as state and lender fees, taxes and aftermarket items all require validation. Validating these items prior to or during customer contracting helps to eliminate a great deal of errors that dealerships commonly face.

e-Contracting’s Slow Adoption

Despite the benefits, the move to e-contracting has been slow to gain traction. The credit application submission process has, for the most part, become purely automated. However, a majority of dealerships have yet to see any additional benefits.

So why haven’t dealerships fully embraced e-contracting? In its dealer satisfaction studies, J.D. Power and Associates reported that two of the main reasons dealers are not using e-contracting are cost and training. This is understandable, as dealers want to devote as much time and resources to what they do best — selling vehicles. The challenge is for technology providers to make the transition for dealers as easy as possible. They must also show dealers how incorporating technology in their everyday business can ultimately improve the bottom line.

Another issue cited by dealers is there aren’t enough lenders participating yet. While e-contracting adoption has been slow, it does look like change is starting to happen. According to the Consumer Bankers Association’s 2007 Automobile Finance Study, more banks and finance companies are starting to adopt e-contracting. Fourteen percent of respondents said they adopted some form of e-contracting in 2006, up from 8 percent in 2005. While this is a significant jump, it seems to represent where the automotive indirect lending industry is right now — somewhere in between a manually intensive process and a highly streamlined, automated process.

The fact that there are multiple industry providers is good news, but it’s also bad news. The problem is today’s market is fragmented, with processes varying from one dealership to the next. Lenders are also slow to invest in technology, making it difficult for the industry to embrace a standard protocol. Ultimately, dealerships need an automated procedure that doesn’t impede sales and F&I, but facilitates and enhances the entire customer experience. So far, the industry is moving in the right direction, albeit slowly. Technology is here. The challenge now lies in expanding the industry’s comfort zone.

Kevin Kopp is the director of indirect lending for Wolters Kluwer Financial Services, a Minneapolis-based provider of regulatory compliance to U.S.-based financial institutions. For more information, visit the company at

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Kevin Kopp

Kevin Kopp


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