Fax Machine Formally Dubbed a Relic of the Past

by Mary Wisniewski

Love. College. Sweatpants. Not everything is easy to let go. For certain auto dealerships, fax machines make it on this hardtopart-with list, even though the devices are passé for sending in credit applications to lenders nowadays, with companies like Finance Express LLC, RouteOne LLC and DealerTrack Inc. offering dealerships Web-based technology to quicken the process, say industry insiders.

“I’m not aware of many dealers who communicate via fax to their lenders,” says Brad Miller, associate director of legal and regulatory affairs at the National Automobile Dealers Association.

The dealers who use the fax machine for this purpose are generally smaller, independent dealerships that align themselves with smaller lenders, says Michael Flashner, vice president of operations at Finance Express, a Web-based dealer management system exclusively designed for independent dealers.

“The larger lender is less willing to accept a faxed application,” Flashner says, explaining some lenders hover between the two schools of thought, and hire servicing companies to keystroke the data in from dealers’ faxes, eliminating the paperwork hassle.

St. Paul, Minn.-based White Bear Lincoln Mercury uses DealerTrack and RouteOne for its deals with banks, but continues to use the fax machine for transactions with certain credit unions.

“The major thing is to fill out the form properly,” says Dave Christensen, finance director, explaining that one unique nuance to the credit applications sent through the fax machine is readability. A typeface, for one, can’t be too light or dark.

Another difference between the two methods is speed, says Christensen, explaining Web-based systems are much faster. Like White Bear, Simms Chevrolet rarely uses fax machine for credit transactions.

“Most of our stuff is done online,” says Bruce Simms, owner and manager.

Gil Van Over, president and founder of gvo3 & Associates, which specializes in developing and implementing compliance strategies within the F&I and sales departments, says if an independent dealer only sells 15 cars a month, software like DealerTrack or RouteOne might make less sense than a fax machine; otherwise few dealers use this method. Streamlining the funding process is where transmitting faxes prevails, says Van Over.

“They use the fax machine to transmit stipulations to the deal,” he says.

Although there are some unique benefits to faxing in material, there are also inevitable concerns.

“One of the problems with faxes is [the credit application] would get there and the information wasn’t readable,” Flashner says.

The ineligibility stems from the handwriting or the fax machine cutting off vital information, he says, noting another headache for the lender receiving the faxes is a big pile of paper that could lead to missing applications.

Becky Chernek, president and chief executive officer at Chernek Consulting Inc., says credit applications sent through the fax machine hold a certain amount of sensitive data, like Social Security numbers, that could be compromised. “It is unfortunate, but the recession has caused a halt in training and having a better awareness of compliance and better business practices,” Chernek says, iterating that falling out of compliance is a consequence of happenstance. The upside of faxing in credit applications is the lender knowing how the dealer filled out the application and whether the consumer signed the credit application, explains Flashner. The compliance concern — knowing whether the data the dealer filled in is representative of the customer — is the same for applications sent with or without paper.

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