Doing It Your Way:How Open-Market Loan Application Models Allow You To Maintain Existing Relationships While Powering Up For Increased Profitability
By David Sinclair
If you're like most dealers today, you are either on the Internet in some form or fashion, or are about to be. The Internet and the e-commerce it channels is fast becoming the major if not the primary business venue of our times. One recent independent research study predicts that worldwide e-commerce could reach between $1.4 trillion to $3.2 trillion in online sales by 2003. But while technology continues to streamline every aspect of e-commerce it doesn't need to totally change the ways in which the F&I manager does business today.
Electronic commerce is an exciting new channel for delivering information, performing transactions, and creating instantaneous access to new lending sources. You need to make sure the system you choose is designed to enhance, not obliterate, the relationships your dealership has worked so hard to build.
Let's take this information back into your dealership. Again if you're like most dealers, you have seen the future and have investigated some form of electronic information exchange. In the area of automobile financing, however, you may be reluctant to impact the existing and lucrative lending relationships built carefully over time. Disrupting these relationships feels analogous to demolishing a well-crafted bridge that gets you from A to B to put up a superhighway that may zoom you from A to Z, but at a pretty high immediate cost.
The good news is: you don't have to destroy business processes that work in order to become electronically enabled . There are web-based loan application models that will accommodate your existing methods of doing business while electronically enhancing the overall lending process. But you need to know what to look for.
What's In A Name?
Although it may sound simple, look for a model that uses "open market" in its description. There are two basic types of loan application models: proprietary and open market. Propriety systems are restrictive in the kind of deals or lenders they allow to be sent through the electronic channel. This makes them limiting; any process or data outside a proprietary system can not be accommodated by it. As a result, you'll often see F&I offices with these kind of systems running "dual"operations. Some information is processed electronically. Some, particularly where it involves a long-standing relationship between a lending officer and the F&I manager, continue to be handled via the old method. Instead of the new efficiency and profitability promised by a web-based loan application, you instead get double the work, and double the risk of error.
The Open Market Solution
There are electronic loan application systems designed to accommodate existing relationships. Generally referred to as "open market," these loan application models are designed to allow communications such as digital faxes among dealers and non-participating lenders. Be sure the electronic vendor is willing to add lenders that you, the dealer, suggest.
In these and other ways, an open market model will allow your dealership a gradual and relatively painless move from the fax machine to the key board for communicating with your lenders of choice.
David Sinclair, is President and CEO of e-fin LLC, Electronic Financial Marketplace. dsinclair@dealeronline.com
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