• DD-Square-Logo_resized
  • ATTEND LAS VEGAS
    • Attendee
      • Registration & Pricing
      • Agenda At-A-Glance
      • Exhibitor List/Floor Plan
      • Sponsor List
      • Hotel & Travel
      • Hosted Dealer Program
      • FAQ
      • Mobile App
    • Exhibitor
      • Exhibit/Sponsor
      • Advertising Opportunities
      • Exhibitor Resources
      • Exhibitor Tips
    • Education
      • Overview
      • Show Schedule
  • ABOUT
    • Conference Overview
    • Best Of Awards
    • Become a Speaker
    • Press Inquiries
    • Partnership Programs
    • Health & Safety
    • Contact Us
    • Get Updates
  • RESOURCES
    • Webinars
    • Downloads
  • NEWS
    • Auto Retail News
    • Digital Editions
    • Press Releases
    • Submit Editorial
    • Subscribe
  • .
  • ATTEND LAS VEGAS
    • Attendee
      • Registration & Pricing
      • Agenda At-A-Glance
      • Exhibitor List/Floor Plan
      • Sponsor List
      • Hotel & Travel
      • Hosted Dealer Program
      • FAQ
      • Mobile App
    • Exhibitor
      • Exhibit/Sponsor
      • Advertising Opportunities
      • Exhibitor Resources
      • Exhibitor Tips
    • Education
      • Overview
      • Show Schedule
  • RESOURCES
    • Webinars
    • Downloads
  • ABOUT
    • Conference Overview
    • Best Of Awards
    • Become a Speaker
    • Press Inquiries
    • Partnership Programs
    • Health & Safety
    • Get Updates
  • NEWS
    • AUTO RETAIL NEWS
    • PRESS RELEASES
    • DIGITAL EDITIIONS
    • SUBMIT EDITORIAL
    • SUBSCRIBE

Las Vegas: Oct 17-19, 2023

REGISTER NOW EXHIBIT / INQUIRE
Q

NEWS:

Sales & Variable Ops
July 8, 2022

How Subprime & Independent Dealers Can Digitize Their Back-Office

Posts:
Sales & Variable Ops
July 8, 2022

How Subprime & Independent Dealers Can Digitize Their Back-Office

By Tim Yalich, Head of Auto Strategy, Wolters Kluwer

Make no mistake, while franchised auto dealers continue to grab most headlines addressing rapidly changing and consumer-facing digital retailing experiences, independent and used dealers (including those known for Buy-Here-Pay-Here financing) remain a constant pillar of the industry serving customers who are focused on used vehicles, or those with less-than-stellar credit or budget.

What’s unique about many of these independent and BHPH dealers is that they serve as both the car dealership and finance provider. Many of these maintain a line of credit from a warehouse lender so they can offer on-the-spot loans to car shoppers who might have been turned down from traditional captive or prime lending institutions.

According to a report from Experian Automotive, the strategy has continued to prove successful: Approximately 39.9% of used vehicle loans are accounted for by BHPH dealers.

These companies have also been effective in securitizing loans for sale into the secondary market. In the past, their securitization efforts involved a significant amount of physical paperwork – pallets of loan documents it had to manually gather and physically ship to a purchasing lender. However, with drastically changing industry best practices centered around faster transaction times, a more digital transaction process, and increasing regulatory compliance requirements, these dealers must find a way to move from paper-based processes to a more digitized one in their back office.

Subprime Lenders & Independent/Used Dealers Must Leave the Paper World

Today, many subprime lenders and independent/used dealers hold paper documents in a secure area in a physical building. Then, before any initial securitization, the dealer must ship pallets of files to the lender and wait for them to make all inputs before closing on the securitization. Once that custodial relationship is established, the dealer would ship on a regular schedule, but a lot of paper is still getting shipped, which adds time to the check-in process.

Consider that there is a lot happening in the timeline to complete a securitization. With a paper-based process, independent and used dealers need to get their files to the party of interest well ahead of closing. That can be severely problematic when today’s process must move at a more expedited pace.

Today’s fast-paced multi-channel origination entails tracking, auditing, and analyzing tasks across various digital and analog locations. And this can create operational and business bottlenecks for warehouse lending partners and negatively impact transfer and securitization for secondary market delivery.

In addition to these needs from the dealer, subprime auto finance providers are increasingly finding that they need new, sophisticated, agile technology systems that enable e-Contracting and post-transaction asset management across an ever-growing array of channels.

Today’s New Digital Ecosystems Designed for Independents

To overcome these challenges, subprime lenders, third-party providers, and independent and used dealers are leveraging digital ecosystems that are purpose-built to handle the auto finance industry’s origination channel diversity. This eliminates the complexities of managing various multi-channel assets post-execution and drastically reduces time and operational costs.

The process allows for improved visibility of assets, quick expansion of the investor and lender pool, agility, and the ability to scale quickly and dynamically.

It also provides the assurance of legal and regulatory compliance, enabling lenders to securely manage digital assets throughout their entire post-execution lifecycle through an electronic collateral control agreement (ECCA).

This advanced process will offer centralized data management across an entire portfolio, allowing automotive professionals to view metadata across various origination channels and asset classes.

It will help to control and track access, manage status changes, and transfer control of digital documents while utilizing sophisticated granular controls and permissions to allow for departmental separation and visibility. All of this will result in improved speed and process efficiency, and for lenders particularly, it will free up capital through syndication, sale, or securitization.

Subprime, independent, and used dealers continue to serve a vitally important role in today’s automotive ecosystems. With this convergence of back-office processes from paper to digital, they will take their next step into tomorrow and solidify what should remain a promising future of profitable growth and service to their local communities.

1: Auto Finance Insights, State of the Automotive Finance Market Q4 2021; Experian

About the Contributor

Tim Yalich is Head of Auto Strategy for Wolters Kluwer, a global provider of professional information, software solutions and services for the automotive and auto lending industries.

View More Content from Dealer Magazine

This article was originally published in the May/June 2022 Issue of Dealer Magazine. You can view the latest digital edition as well as past issues of Dealer Magazine here.

Sales & Variable Ops

SHARE

Share on Email
Share on Linkedin
Share on Facebook
Share on Pinterest
Share on Twitter
← Previous Article Next Article →
Posts Industry Press Releases

One View Integrates with Autosoft to Enhance Document Digitization for Auto Dealerships

One View becomes certified partner of Autosoft’s Partner Program – providing seamless integration between both systems One View, an auto industry-specific data solution specialist, announced the integration of its document management system with
Posts Marketing & AdvertisingTrending Industry News

How Does Google Analytics 4 Impact Call Monitoring?

Google Analytics 4 (GA4) is here, and Universal Analytics (UA) is a thing of the past. So, what is the big difference between GA4 and UA, and what does it mean for dealerships and their automotive call monitoring solutions? Universal Analytics (UA) o
Posts Industry Press Releases

One View Integrates with Autosoft to Enhance Document Digitization for Auto Dealerships

One View becomes certified partner of Autosoft’s Partner Program – providing seamless integration between both systems One View, an auto industry-specific data solution specialist, announced the integration of its document management system with
Posts Dealer Ops & LeadershipTrending Industry News

Three Key Areas to Focus on for Fixed Ops Success

A well-managed BDC can significantly impact sales, raise service profits, and increase retention, but achieving success in this field requires three key ingredients: Focus, People, and Consistency. Without these elements working in tandem, even the m
Posts Dealer Ops & LeadershipTrending Industry News

Astroturfing: What it is and Why Your Dealership Should Avoid it

Astroturfing is organized activity that is intended to create a false impression of a widespread, spontaneously arising, grassroots movement in support of…something…that is in reality initiated and controlled by a concealed group…or corpora
Posts Uncategorized

Cracking the Code: Driving Team Action Post 1-on-1s

Ever left a meeting whether it’s with your team or a 1-on-1, on cloud nine, believing your team was all set to conquer the world, only to find their enthusiasm fizzling out days later? The challenge lies in converting intentions into actions amidst
Posts Sales & Variable OpsTrending Industry News

How End-Of-Year-Sales May Impact Auto Finance Digital Transformation Strategies

Following a challenging sales environment in 2022, a noticeable recovery in the automotive sector has stabilized in 2023. This year, even as supply chain problems subsided, new challenges emerged, such as the persistent risk of a potential recession,
Posts Industry Press Releases

Mopar and Petra Automotive Products Partner to Launch New Maintenance Products to Dealers Across North America

Petra Automotive Products, the fastest growing premium automotive products manufacturer in the world, is proud to announce 11 of their best-in-class products will be launched under the Mopar® brand for Chrysler, Dodge, Jeep®, Ram and FIAT® dealers

NEWSLETTER

SUBSCRIBE

DEALER MAGAZINE

Dealer Magazine March/April 2023 Issue Featuring an Interview with NADA 2023 Chairman
MAGAZINE
Digital Dealer Logo White
FOLLOW US ON
  • Follow
  • Follow
  • Follow
  • Follow
  • Follow
© 2023 Emerald X, LLC. All Rights Reserved.
ABOUT    CAREERS    AUTHORIZED SERVICE PROVIDERS   DO NOT SELL MY PERSONAL INFORMATION   TERMS OF USE   PRIVACY POLICY