All Ears Podcast | Helping increase dealership efficiency and profitability with eContracting.

In this episode, host Emma Hancock speaks with Ally Executive Director Mike Woodward on the rapid growth of e-contracting. He highlights the benefits, such as faster approvals, reduced errors, and significant time and cost savings for dealerships nationwide.

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Emma Hancock: Hi everyone. Welcome back to the All Ears podcast. I’m Emma Hancock with Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio.

In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally, plus dealers from around the country to offer actionable solutions in our ever changing industry. Today, we catch up with Mike Woodward, Executive Director, Auto Consumer Operations at Ally Financial.

We’ll be discussing the meteoric rise in e-contracting. It’s no surprise that the number of dealerships now using e-contracting has increased rapidly because it’s really a win-win for both dealer and consumer saving time is one of the key benefits to e-contracting faster approvals, plus a whole host of other tangible advantages.

Mike, thank you so much for taking the time.

Mike Woodward: Emma, thanks so much for having me. I’m excited to be here and share a little bit about what we’re seeing and hearing around e-contracting with the dealers that we work with day in and day out.

Emma Hancock: And Mike, it’s a lot of dealers. Ally works with over 21,000 dealerships across the country for the ones that are well underway with e-contracting, what kind of feedback are you hearing from them and what kind of differences has it made to their day-to-day business?

Mike Woodward: Yeah, thanks so much for the question.

You know, the first part you mentioned a little bit, we continue to see tremendous growth in e-contracting since pre pandemic days. So, from an Ally perspective, we’ve seen north of a 250 percent increase in e-contract submission from the end of 2019 until today. As we talk to dealers, they articulate a lot about how e-contract allows them to continue to be much more customer centric, helps them evolve their digital sales process to be equally enabled in both in-person and virtual experiences for their customers to complete their financing process.

As we talk to them a lot about the biggest benefits that they see and that we hear, you know, the top one always continues to be speed of funding. From an Ally perspective, we see almost a full day faster speed of funding for an e-contract versus a paper contract. And that’s in addition to the one to two days it takes for a paper contract to be mailed, received, scanned, and all those are really needed to start the funding process.

Additionally, we see a lot cleaner contracts come in than paper contracts. So, from a dealer perspective, that’s a pretty big decrease in the held contracts and really limits the rework that their F&I offices need to do to get a contract funded. Dealers also talked to us a lot about the tighter integration that these e-contract platforms have with their DMS platforms.

This really allows them to minimize the data entry that they have to do manually. And when there’s manual data entry, there’s associated errors that go away with the integration between DMSs and those e-contract platforms. But if I had to sum it up, the biggest overall theme we hear from dealers is the consistency that it allows for them to be able to have within their F&I office or offices to make sure that all of their contracts are done in a very similar fashion.

Emma Hancock: When you talk about consistency, it makes me think about accuracy as well. And everything you’ve just mentioned really talks to time saved, you know, of course it’s a win-win, but the reason why it’s a win-win for a customer and dealer is time saved with the adoption of e-contracting.

Tell us about some of the differences e-contracting has made with tasks like data entry, form approvals and the integration with aftermarket products.

Mike Woodward: Absolutely. There’s a lot of highlights that we can talk about the benefits here. So, e-contract platforms typically have built in validation required forms list functionality.

So, what that means is lenders have the ability to provide rules or forms lists that are unique to each deal that give the deal a real time feedback, what forms they need to include, if there’s any issues or errors with the contract prior to them submitting that. So, it gives them a peace of mind that when they do click submit, that they believe that contract is has exactly what’s needed to be able to pass through the funding of the various lenders.

There still can be issues that are present after submission. And so, e-contracts also then enable that contract to be delivered to the lender much more quickly. And that means that the lenders can get a faster first look at that deal and then provide feedback back to the dealer about if there are any issues or errors that persist that the dealer still needs to remediate prior to that getting funded. So, I think a little bit more about some of the functionality that saves time from a dealer, all of these platforms have document upload functionality built in. So, not only does that give the dealer the ability to upload the full suite of documents that are needed for a contract at first submission, but if there are any trailing documents that are needed from a lender to be able to fund that deal, the dealer can continue to leverage that document upload functionality and get that very quickly to a lender to be able to finalize that deal, get it validated and get that funded.

So, if you really think about all the items we talked about, not only does it save an immense amount of time on the initial submission and make sure that it’s done right the first time, but also then reduces any of the follow up activities and the amount of time and effort that’s needed to get a deal across the goal line if something else does need to be worked on before final funding.

Emma Hancock: It really feels like it’s meant to be e-contracting specifically for the auto business. When you sum it all up, passing that baton just becomes so much more efficient. I want to ask you about same day. What about this notion of same day contract validation and funding?

We know that banking hours don’t always line up with busy times for dealerships. So, how does e-contracting help alleviate this? Is same day really possible?

Mike Woodward: Yeah, that’s a great question because prior to e-contracting being introduced, same day wasn’t that viable for most lenders. Now with e-contracts actually being received by a lender within minutes and actually probably within seconds of submission from a dealer, and then equally important, those e-contracts coming over with a good bit of corresponding data that’s aligned with it, it offers lenders the ability to introduce a good bit more automation into their process that really speed up that funding flow. So, as you get some of these deals that have been validated, we know all the required forms are there. They can pass very quickly through the lender’s validation process. And so, depending on the day and time that contract comes in, not only can that be validated same day, but it also offers the potential for a dealer to be able to receive ACH funding the same day as well. So, at Ally, we’ve introduced a good bit of automation into our processes and we see a good number of contracts that are validated within minutes of arrival. And then some portion of those certainly, depending on the time are able to be funded same day as well for the dealer.

Emma Hancock: That’s incredible. So, we talked about time savings. Let’s talk about cost savings because that’s what’s also happening here for the dealers that have already switched to e-contracting.

What kind of savings are they seeing now that they’re no longer physically shipping and mailing forms and contracts? Are they significant?

Mike Woodward: Yeah, each deal is going to depend on how significant our base amount of volume they do. But if you think about the number one item that they get to save on is that overnight mail cost.

Now, this is going to vary dealer to dealer. However, if you think about the overnight cost for one or two days of shipping multiplied by the number of contracts that they submit to lenders on a monthly basis, that certainly can add up very quickly.

The second item I would talk about here is capital. So faster funding by lenders means faster payment to dealers. And if those dealers receive payment faster, they’re going to be able to leverage that capital to more quickly replenish their inventory.

The last item I’d mentioned here, and this one’s a little bit harder to put a dollar figure on, but if you think about increased productivity of the F&I offices that we talked about from less time spent on pre and post contract submission activities.

That’s time than the F&I office can use to spend on closing additional deals versus following up on existing. So, all of those are going to have either a very tangible or intangible financial benefit for dealers who are leveraging e-contract processes.

Emma Hancock: Really good points there, Mike because I think the physically shipping and mailing, that’s kind of obvious, but the other two you mentioned, like you said, possibly intangible, but it all adds up. You’ve painted such an amazing picture for us. I want to thank you so much. You’ve given us some great information on e-contracting. That is it for this episode of the All Ears podcast.

I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio, thanks for listening and bye for now.

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