Since its arrival, e-contracting has held high promise in moving F&I departments toward paperless operations. But like many technologies, e-contracting has been slow to fulfill its initial promise. While dealerships and lenders inch closer to this promise, there are several obstacles that have slowed broader adoption. So, before you make the move to join the ranks of dealerships who have, it’s critical you consider the following factors.

1. What's Your Dealership's Tolerance for Change?

Adopting any new technology requires process changes for the dealership. The question is, how well do your employees, especially the F&I department, adapt to new products and technologies. Is the department too entrenched in the way things have always been done. How willing are you to continually champion the concept and measure utilization?

The key component to any type of technology or department change is to know how dedicated everyone is to implementing new processes. Not having everyone onboard simply creates additional obstacles that will undermine the effectiveness of e-contracting in your dealership.

Additionally, one must look at the entire F&I process in order to make it seamless. Today, the F&I process requires as many as 10 to 20 pieces of paper to be reviewed and signed by the consumer. If the contract is the only piece that can be processed electronically, it still leaves you with a mix of different processes to manage. Software cannot do it alone, as e-contracting will require process change and the discipline to use it to make it successful.

2. Does the e-Contracting Solution Integrate?

One of the biggest selling points of e-contracting is its promise to reduce the number of forms, signatures and duplicated content. It's important to have an e-contracting solution that integrates with the dealership management system (DMS). If your e-contracting solution can’t pull data from the DMS, asking customers to wait while you re-enter their financial information defeats the purpose of the technology.

3. Calculating Your ROI

When it comes to e-contracting, there are costs and gains that are difficult to predict. As for costs, what type of investment will be required for printers, electronic signature pads and training for dealership personnel? And how much of that cost will be ongoing?

As for gains, there are savings associated with reduced contract error rates and re-contracting that need to be considered. One also needs to keep in mind how much quicker the dealership can get a loan funded by e-contracting-eligible lenders. There's also the time and money savings of not having to mail the funding package to lenders. Eliminating errors such as the use of outdated contracts, missed signatures, and documents containing non-validated information can also yield benefits that drop straight to the bottom line. Calculate those in dollars and cents.


4. What Lenders Are E-Contracting Eligible?

The push to adopt e-contracting will come from lenders and dealers. Ask yourself, "How many lenders that the dealership works with are connected to this solution?" When lender participation is fragmented it can make adoption and utilization much more problematic.

5. How Much Leasing Business Do I Transact?

Leasing is not available with most e-contracting solutions. This is why you need to factor in what portion of the dealership's F&I business is tied to leasing.

6. How Will Your Customer Receive the Change?

Finally, take a hard look at your customers. The adoption of e-commerce is definitely a positive experience for today's Generation X and Y customers. One might argue it's a required solution to speak the language of these consumers. But since consumers feel they spend too much time in the F&I office, any process that can shorten that length of time will be viewed as a positive change by all customers, regardless of demographics.

The adoption of a paper-reduced F&I experience will bring benefits to dealers, lenders and solution providers. For dealerships, the benefits are higher CSI and profits. For lenders, the benefits are gains in business and efficiency. For solution providers, the embrace of e-contracting opens the path to progress.

Christopher Morris is the senior director of F&I product planning at Reynolds and Reynolds (, a provider of software and services to automotive retailers. He can be reached by e-mail at [email protected].

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