Challenges dealerships face during car financing & how technology can help

Efficiency is everything, especially in auto sales. A smooth financing process improves customer satisfaction and drives profitability for dealerships: More efficiency means more sales. As such, delays or roadblocks in the process, particularly during the financing and insurance (F & I) process, can tarnish the customer experience and slow down business from all angles. Here’s what they are, their consequences, and how to solve them:

4 common challenges in dealership financing

1. Manual verification of insurance, document collection, and more in F&I departments

Many dealerships continue to rely on manual processes for key financing tasks, such as collecting customer documents, verifying auto insurance, and approving loans. These tasks, when performed by back-and-forth emails or phone calls and a lot of paperwork, are time-consuming and prone to errors. The consequences for dealerships include increased operational inefficiencies and longer transaction times. During busy periods, these manual workflows can create significant bottlenecks, slowing down the car-buying process. For car buyers, the impact is clear: unnecessary delays in securing financing can cause frustration, erode confidence in the dealership, and potentially lead to lost sales if the process takes too long.

2. Managing customer expectations

Today, car buyers expect a seamless, fast, and transparent purchasing experience, but on average, it can take nearly 4 hours to finance a car at the dealership. When the financing process is delayed—often due to paperwork issues or the time it takes to verify insurance policies—this can lead to dissatisfaction. Managing customer expectations while ensuring compliance and accuracy is a delicate task for dealerships. For buyers, delays during financing can diminish trust in the dealership’s ability to deliver a smooth transaction, negatively affecting the overall buying experience. In extreme cases, customers may even walk away, leaving the dealership with a lost sale and damaged reputation.

3. Compliance and regulatory issues

The world of automotive financing is governed by a complex web of regulations, including consumer protection laws and financial reporting requirements. Dealerships must ensure they remain compliant, and this often involves detailed paperwork and accurate reporting. However, relying on manual processes for compliance increases the risk of human error, which can lead to severe consequences. Non-compliance could result in legal penalties, financial losses, or even voided contracts. For dealerships, these errors are not only costly but can also damage their reputation, while car buyers could face legal complications or delays in taking ownership of their vehicle.

4. Inconsistent or outdated Dealership Management Systems (DMS)

Many dealerships still use outdated or disconnected dealership management systems (DMS), which limits their ability to streamline operations. Without real-time integration between the DMS, lenders, insurance providers, and credit agencies, dealerships face slowdowns in processing financing applications. Moreover, old systems often lack essential automation features, meaning dealership staff must handle tasks that could otherwise be automated. This inefficiency leads to slower approvals and longer wait times for customers, reducing their satisfaction. For the dealership, these delays not only impact customer retention but also reduce their overall productivity and sales potential.

How technology can address these financing bottlenecks

Keeping up with advancements in the automotive industry ensures the dealership remains competitive and equipped to handle future challenges in financing, and dealerships should view the adoption of new technology as an ongoing process. 

Finding the right DMS to accelerate financing

A robust DMS is essential for dealerships looking to streamline their financing process. The right system can automate many manual tasks within the F&I department, enabling faster processing of loans, insurance verification, and paperwork. Additionally, it ensures smoother communication between dealerships, lenders, and insurance companies by integrating with third-party tools and services.

Key features of an ideal DMS include real-time data syncing, automated workflows for document management, and credit score integration. These features reduce time spent on manual data entry, minimize errors, and allow staff to focus on providing customers with a better buying experience.

The future of F&I: Automating auto insurance policy updating

One of the most time-consuming aspects of car financing is verifying that the customer has valid auto insurance and updating it to accommodate a new lienholder and/or a new car. This process often involves multiple phone calls, emails, or manual checks with insurance companies, which can delay the overall financing approval process. Automating this process, using tools, like from MeasureOne, eliminates these delays, allowing for instant updating of the customer’s insurance status. Not only does this reduce human error, but it also ensures that the data being used is up-to-date and accurate. This can make a huge difference, particularly in high-volume dealerships. 

Here’s how it works: Through integrations with a DMS or a dealership’s current sales workflow, automation tools provide real-time access to insurance policy data from the primary source—auto insurance accounts—verifying the customer’s coverage and updating their policy with the new vehicle and/or updated lienholder instantly via API connection.

This automation drastically reduces the time spent updating and verifying insurance, allowing F&I departments to focus on finalizing the financing and getting customers on the road quicker. The system also provides real-time updates on any changes to the insurance policy, ensuring the dealership has the most current information at all times.

Access MeasureOne’s one-of-a-kind solution

The ability to automate the entire insurance update process addresses a critical gap in the current market. While updating insurance is necessary, it’s not sufficient on its own to justify integration. Auto Insurance Policy Updating from MeasureOne goes further by enabling the complete updating of insurance policies in a fully automated manner—adding significant value to both dealerships and their customers. In fact, it also: 

• Increases approvals on the lot: Know borrowers have the right insurance coverage in place and many necessary updates are made with ease
• Enhances the F&I (finance & insurance) process: By automating the insurance update process, dealerships can reduce the time spent on manual verifications and minimize the likelihood of deal delays or rejections. This efficiency not only speeds up sales but also boosts customer satisfaction by providing a smoother, faster car-buying experience.
• Integrates seamlessly with any dealership workflow or DMS: Designed to integrate effortlessly with any dealerships’ current sales process or Dealer Management System, MeasureOne’s Auto Insurance Policy Updating offers a user-friendly interface that minimizes disruptions and enhances the overall dealership workflow.

Learn more about the process and bring efficiency to the forefront of your dealership today!