If you’re looking to increase dealership efficiency and profitability, then it’s time to take a closer look at the benefits of e-contracting.
E-contracting has gained in popularity with dealerships and car buyers alike, especially over the last several years. Besides the positive impacts of environmental awareness, dealerships are noticing a plethora of other benefits that can catapult them ahead of the competition.
Here are ten ways e-contracting can increase dealer profitability
1. Expedite the funding process.
Dealerships that use traditional paper contracting have a much longer wait time for funding than those that use e-contracting services. Once an e-contract is submitted, financial institutions typically fund deals within a 24-48 hour period. Some will even send funds within hours of submission. Paper contracting takes a lot longer because of shipping and processing times. Dealers who stick with traditional contracting may not receive funding for a week or more after the customer has taken delivery of their vehicle. Delayed funding becomes a massive problem for dealerships who rely on those funds to keep up with floorplan payments.
2. Reduce dealer floorplan interest.
Most financial institutions require a floorplan payoff 3-7 days from the date of finance. Because e-contracting reduces the time it takes to deliver a vehicle, payoffs can be completed sooner, therefore reducing the time the car is on the lot accruing interest.
3. Improve efficiency and shorten delivery times.
Digital tools can help shave hours off weekly paperwork processing which in return can improve the deal closing process. Car buyers don’t want to spend extra time in the showroom waiting for paperwork processing and on average customers spend about 3 hours at the dealership completing the purchase process. With electronic contracting dealers can eliminate redundancies by importing customer information from their CRM or DMS into all the forms needed to complete the deal. The buyer (and co-buyer) can sign a digital signature pad once, reducing the time it takes to finalize their sale.
4. Improve accuracy.
Because digital contracting eliminates the need to fill out as many forms, sales staff can focus on entering the customer information correctly the first time. Customer information stored in your CRM or DMS systems can be used to produce a credit application, that can be seamlessly turned into a working car deal.
5. Reduce expenses by ditching paper forms.
Every time you print a form incorrectly, miss a signature, or sign in the wrong spot the bank may ask the dealer to recontract. Auto dealers spend so much money on forms that end up in the trash because of mistakes. E-contracting software companies such as Dealertrack and RouteOne now work with over 7,400 lender partners and counting. Even dealer management systems are integrating e-contracting menus into their services. It’s become very easy for car dealers to incorporate digital tools into their daily processes. As a bonus, e-contracting also reduces printer maintenance and toner costs.
6. Never worry about running out of contracting supplies.
Digital contracting eliminates not only paper bank forms but also the need for aftermarket product paperwork. Most e-contracting companies allow dealers to process add-ons such as tire and wheel protection, extended warranties, and GAP insurance. There’s nothing worse than rushing to finalize a deal only to discover that you’ve run out of the right forms. The entire deal is now on hold until you can get more which is frustrating for the salesperson and the customer waiting to take delivery of their new vehicle. E-contracting can help dealers avoid this problem entirely.
7. Decrease shipping costs.
Not only is there a cost to ship out a customer’s contract, but charges add up fast when you consider the number of deals that get sent back for re-contracting due to dealer error. Shipping is a necessary dealer cost, but it can be dramatically reduced by using e-contracting.
8. Make it easy to stay organized.
E-contracting reduces filing space (and time), and also the chance that customer paperwork will end up lost. By storing car deals digitally, it’s simple to pull up the information you need from any dealership computer or mobile device with access to the necessary software.
9. Enhance Security.
Because all legitimate financial institutions offer e-contracting, they provide strict security to protect sensitive customer information. By storing deals and credit applications digitally, you eliminate the risk of identity theft ensuring you comply with the FTC’s Red Flags Rule.
10. Increase overall customer satisfaction.
Ratings are critical to dealership success, and the delivery process has a tremendous impact on customer satisfaction. E-contracting dramatically reduces the time a customer needs to spend in the business office, and according to the Cox 2018 Car Buyer Journey less than half (46%) of consumers are satisfied with how long the car sales process takes.
There is always pressure to stay ahead of the competition, and by maintaining dealership efficiency, you can increase the chances of staying on top. It’s not always easy to switch processes, especially when you think everything works just fine. The thing is, financial institutions are inevitably moving closer to all digital platforms. It saves them money and appeals to car buyers looking for a fully digital car-buying experience. Once you take some time to set up digital processes like e-contracting, you’ll quickly see a considerable increase in dealership performance, profitability, and overall customer satisfaction.
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