The financial institution must outline expectations and have consistent communication with participating dealers to ensure the program is being administrated following the guidelines.
FREMONT, CA: Indirect auto lending is a convenient way for financial institutions to increase loan volumes and a convenient way for members and customers to get financing directly from a dealership. However, there are risks related to indirect lending programs and items that the financial firm must be aware of before deploying. The financial institution should outline demands and have consistent communication with participating dealers to ensure that the program is being administrated in connection with the guidelines set in place at the starting of risk management. Here are some tips that every bank and credit union should consider when establishing an indirect auto lending program.
One size does not fit all. Process and flexibility are essential, especially if firms would like the financial institution to stick out. The loan origination system should be flexible and seamless to configure. If the organization is in the process of purchasing a new loan origination system, they must be sure to ask about flexibility and configuration.
Outline what it is that firms want from the relationship before they step foot on the dealership. Firms should be direct and to the point when talking to the decision-maker. They should also ask what they need to do to get their business while also telling them exactly what they are looking for.
Stipulations can be a real problem for dealers searching for close business rapidly. They are meant to guard the lender on high-risk loans but can be frustrating on fewer risk loans. Strict stipulations can be time-consuming for the dealer and may make it hard for the organization to find dealerships to partner with.
Processing and Funding
The program guidelines sent out to the dealer are specific and seamless to interpret. Dealers require knowing if firms allow back end products to be added or included within the approval. It’s also essential to let them know if they require proof of income for both borrows. Loans can be delayed because the dealer misunderstood the approval, the stipulations offered, or the program parameters.