Driving Under the Speed Limit: Dealers and Lenders Slowly Embrace E-Contracting

By Bridget McCrea

For years, car dealers and lenders have been playing a chicken-and-egg game with e-contracting, a process of fulfilling car sales and funding electronically, instead of via fax and courier.

Dealers have said they are in favor of the technology, which lessens waiting times for loan fundings and streamlines the loan-application process, and are looking to lenders to push the process. Lenders have said they are in favor of the technology, but are waiting for dealers to ask for it.

The main sticking point to mass acceptance of e-contracting in the auto finance industry is dealer comfort with automating what has always been a paper-intensive process. For those that have embraced the change, there is no looking back.


It’s been about a year since Lia Infiniti of Latham, N.Y., purchased and installed its e-contracting system. During that time, John Greenhut, the dealership’s finance director, says the dealership has been able to streamline the application process, eliminate duplicate entries, and achieve quicker funding for customers. The learning curve was easy, says Greenhut, who now “gets funded in a few hours, instead of five days.”

Currently using the system for Infiniti purchases and leases, and for loans made through a national bank’s indirect auto finance unit, Greenhut says he wishes more lenders would get on board with e-contracting.

To streamline at least some of its auto loan processing, Lia Infiniti relies on a computer-driven delivery system that uses Electronic Retail Installment Sales Contracts (ERISCs) in place of paper-based Retail Installment Sales Contracts (RISCs). The former contain the same disclosures and are formatted like their paper cousins, but are looked upon as more “secure”since they cannot be altered once car buyers sign their names using a signature pad.

With e-contracting, those long contracts and fax machines become a thing of the past as the “application” is distributed to multiple lenders who, in turn, send back their financing offers. Developed by companies like DealerTrack and RouteOne, e-contracting is being slowly adopted by dealers and lenders nationwide.

But for every dealership that’s willing to forgo the paper and take the electronic route, there are many more that have steered clear of this new approach to financing. “I think dealers are scared of it,” says Greenhut. “It’s like someone coming in and saying that they’re going to install computers in an office where they’re still using adding machines.”


Yet customers hardly notice the difference between electronic and traditional contracts, except for the fact that they’re signing a little electronic box, says Greenhut. “I present a review copy to them, and once they agree to all the figures and terms, they simply sign the box.”

Bill Seidle’s Nissan in Miami was an early adopter of e-contracting back in 2004. Spurred by F&I Manager Andrea Forteleoni, who was on a mission to streamline the application process and reduce paperwork, the dealership saw the emerging technology as the “wave of the future,” despite the fact that many other dealers were wary of it at the time.

“People look at new things suspiciously, and the seasoned professionals who are used to doing things their own way don’t always welcome new technology with open arms,” says Forteleoni, who admits that e-contracting has both upsides and downsides. On a positive note, it speeds lender-approvals, enabling customers to receive their first statements in plenty of time for payment.

On the other hand, human input errors can bungle the sys- tem and create problems. “On my wish list for e-contracting is some type of computer check that ensures that the parameters, rates, and rate spreads” are inputted correctly, says Forteleoni.

As the business world strives to go paperless, expect to see even more dealers and lenders using e-contracting. “Once manufacturers like Toyota and Honda go into it in a major way, the dealers will be more apt to join in,” says Forteleoni. He adds that the overall consensus is that e-contracting will be fully developed in five years, although he predicts a shorter timeline. “The technology is there, it’s a just a matter of training and expanding the possibilities.”

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