WASHINGTON -- A national standard for auto finance e-contracting won final approval in July. According to the American Financial Services Association (AFSA), the new guidelines could save captive finance companies an average $11-18 million annually.

The standard was approved July 19 by the American National Standards Institute (ANSI). It sets criteria for creating, storing, certifying and assigning "electronic chattel paper" (such as electronic retail installment sales contracts and leases). It also sets criteria on establishing control or possession of this electronic record from when the dealer creates it through its assignment -- if applicable -- to other parties.

AFSA's savings estimate is based on the projections of its auto finance members, said Randy Lively, AFSA's president and CEO. "E-contracting saves money for businesses by eliminating paperwork and storage and by improving employee efficiency," he said. "Replacing paper documents with electronic records and electronic signatures greatly reduces the time needed to process originations and securitizations."

The captives welcomed the ANSI standard (X9.103, Motor Vehicle Retail Sale and Lease Electronic Contracting). "E-contracting will help us improve service to our dealers with faster and more reliable paperless contract processing and funding," said George Halloran, vice president of global strategic planning for Ford Motor Credit Co. " Reducing the cost of contract processing with increased speed and reliability will ultimately reduce the cost of financing for consumers."

Auto finance is the first consumer finance sector to have an e-contracting standard. It will serve as the backbone for similar standards in other industry segments involved in mortgages, credit cards and personal loans.