eSignatures are fast-becoming the go-to for paper-heavy, regulated industries. Industries like the car finance industry have started to understand the dramatic impact digital adoption can bring to its operations and profitability. This blog explores 5 ways eSignatures help car finance businesses.
CURRENT INDUSTRY STATUS
According to the J.D. Power U.S. Sales Satisfaction Index, it “took new-car buyers on average 3.6 hours to complete a purchase in 2017.” The overwhelming cause for this was the abundance of paperwork that was required. Imagine the number of deals that could be optimized if the time to complete a sale was cut in half, or even more. Countless documents are exchanged between customers and dealers within the automotive industry and while the information the documents provide is necessary, the time spent filling them out manually is definitely not.
THE HOPE AND REALITY OF THE DIGITAL ERA
It is time to transition into the digital era, taking advantage of the options this realm provides. Instant gratification is now expected by consumers and eSignatures help car finance businesses appeal to these growing standards. There is no longer a need for paperwork as cell phones provide the perfect means to fill the growing gap between customers’ digital expectations and company requirements. Dealers need to digitize their processes to maximize the cost of business and adhere to the speed and ease that these transactions can reach through the use of the cell phone.
Transactions can happen now, in real time. With the help of technological advancements, there’s no need to wait to be present in the dealership. Engage in the automotive industry wherever you are, whenever you please.
CAR FINANCE INDUSTRY OVERVIEW
The car finance industry is on the rise. “New auto loans jumped 17 percent to $77.7 billion, and used auto loans rose 12 percent to $135.3 billion” (Bates). With increases as such, there is an extreme amount of paperwork that follows. “Historically, customers have rarely relished the process of initiating a loan, with its reams of paperwork and long wait times at the dealership” (Deloitte). The time spent completing paperwork for these purchases could be utilized in more effective ways if companies implemented eSignatures into their work style.
WHAT IS AN ESIGNATURE
An electronic signature (eSignature), simply put, is a digital version of a normal signature. In order to be valid, an eSignature must meet these four criteria: (TechTarget)
eSignatures are the future for signing legal documents. They provide countless benefits to facilitate interactions for both company employees and customers.
- Intent to sign
- Consent to do business electronically
- Association of signature with the record
- Record retention
WHY USE ESIGNATURES IN THE CAR FINANCE INDUSTRY:
The automobile industry requires many layers of paperwork in order to secure a purchase. When completing pages of paperwork manually, it is easy to miss a signature space. Imagine the frustration of completing pages of paperwork in hopes of purchasing a new automobile, only to find out that after it was mailed one of the initial spaces were missed. Unfortunately, this happens often, delaying processes and even leading to a loss of a sale because of customer frustration.
“A Forrester Research survey found that documents with electronic signatures reduced the error rate by 80% and improved productivity by as much as 85%” (Sharma). By decreasing the rate of error, companies can close more deals without risking that their unsatisfied customers will flee to another brand.
More specifically, “the automated processes of electronic signing can also reduce the financial impact of human error” (ContractLogix). These errors can result in additional shipping costs or a loss of the client altogether. The functionality between eSignatures and each automotive company provides a smooth and successful sales interaction, leading to a more enjoyable experience for both parties.
eSignatures have the added benefit of being mobilized, meaning you can fill them out anywhere. This aspect broadens a company’s capabilities as customers can engage in sales from all around the globe at their own personal discretion. More importantly, they provide the ease of signable, textable documents that fit effortlessly into the busy lives of their clients.
“Moving to electronic signatures and other digital technologies makes buying a car more accessible for the consumer, creating a simpler sales environment for the auto retailer” (Power). Within the auto industry, eSignatures are “easier, faster, and more convenient than driving back and forth from dealer to banker, wasting a lot of gas and paper in the process. You're not drumming your fingers on the lender's desk impatiently while you wait for paperwork to print or fax – and they're working more efficiently as a result” (Bates).
eSignatures provide increased security for each individual transaction. The use of “a digital process allows for real time and automatic monitoring and greatly reduces the chance of fraud and the time taken to detect it.” (Sharma).
“At no stage does the document leave the control of the organisation holding the information and it provides a clear audit trail history, as you can see at what date and time the document was accessed and signed and from which IP address. If the document is challenged you can quickly trace and reconstruct events” (Hickey). This is extremely reassuring for car financers as they do not have to worry about security issues when dealing with a client. This allows car loans to process faster and more reliable as all of the information is clearly visible within each and every step.
In today’s technological era, speed is a vital aspect of achieving company success. “If you can't keep up and move quickly, your competitors will. They won't hesitate to leave you in the dust if you can't think on your feet” (Fridman). This is where eSignatures demonstrate their value. They allow auto retailers to engage in real-time purchases between the dealer and the customer. This optimizes purchase situations by ensuring the customer will buy from them in that specific moment.
Customers often undergo “decision fatigue” after the long paperwork process that is involved at a dealership. A joint study by AutoFi and PwC shows that “consumers want a quick and easy finance process, but want control over the experience.” By utilizing eSignatures, companies can capitalize on the buying situation and ensure a speedy purchase that does not waste the customer’s time.
By going digital, auto retailers can save money on WIPS (work-in-progress), a term which describes partially completed products awaiting completion. WIPS “refer to the raw materials, labor, and overhead costs incurred for products that are at various stages of the production process” (Investopedia). These include a company’s transaction costs of paper, ink, copying, and shipping, to name a few. Esignatures will help to ensure that basic company costs are lower so they can optimize each sale they get.
“Very few documents actually need to be retained in paper form, and auto retailers that transition to eSignature solutions can position themselves to reduce costs dramatically over time, despite the initial expenses that come with transitioning to a digital systems” (Power). These include STIPS, or stipulations which are “documents required by a lender to fund a loan” (Road Loans). While automobile companies require various documents to finalize a purchase, such as proof of income and residence, these can be delivered digitally as opposed to mailed in. This transition to digital usage cuts shipping costs, saving the company money each time a purchase is completed.
eSignatures will help bring the car finance industry to a new level. With the reduction of errors, added convenience, security, speed, and cost saving capabilities, the benefits of switching to eSignatures is clear. Go digital and take advantage of the aspects that eSignatures can provide to the realm of automotive retail.
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