Embracing Continuous Improvement: Measuring eContracting’s Impact on Lending Efficiency

Today’s auto-buyers spend more than seven hours researching vehicles online, according to the 2024 Cox Automotive Car Buyer Journey Study, however, frustration sets in during lengthy financing transactions. The same study revealed that the final transaction alone takes more than three hours – much of it tied up in paperwork and contract processing.

For credit unions, this gap between digital expectations and slow, manual processes isn’t just inconvenient – it’s a competitive disadvantage. Indirect lending has been hindered by manual paperwork, errors and delays. As member and dealer expectations evolve, credit unions need to reconsider legacy processes, especially around loan contracting.

Why eContracting Matters

eContracting has emerged as a critical step in modernizing indirect auto lending. It reduces friction, accelerates funding and strengthens dealer relationships. According to Wolters Kluwer’s 2024 Auto Finance Digital Transformation Index, eContracting adoption rose 37% year-over-year, with a 138% increase since 2020.

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By embracing eContracting, credit unions can close this gap between digital expectations and outdated processes. Digitizing the contracting process eliminates interruptions, reduces manual errors and enables faster funding, benefiting credit unions, dealerships and members alike.

Operational Benefits for All Stakeholders

By moving from manual to digital workflows, credit unions unlock new efficiencies and strengthen relationships with key stakeholders.
For credit unions, eContracting streamlines operations, enhancing efficiency and strengthening dealer partnerships. It reduces processing bottlenecks, minimizes errors and improves the overall member experience. By shortening contract-in-transit time, it enables faster loan funding, which further benefits dealers and members alike. Real-time validation and automation decrease manual errors, cut rework and increase processing volume without adding staff. Less paperwork, lower costs and fewer corrections result in significant savings.

For dealers, eContracting offers accelerated deal closures, reduces paperwork and improves accuracy, resulting in faster funding, increased customer satisfaction, and a consistent contracting process and customer experience in the finance and insurance office. Accurate, digitally validated contract packages significantly reduce funding delays, ensuring dealers receive payment more quickly and reliably. eContracting also minimizes rework by flagging errors in real time, eliminating the need for back-and-forth communication and costly corrections that can stall the funding process.

For members, eContracting provides greater convenience and speed. It gives them the flexibility to review and sign final loan documents either at the dealership or remotely, significantly reducing the time spent finalizing their purchase. This streamlined process enhances transparency and satisfaction, leaving members with a positive impression of both the dealership and the credit union. As a result, higher member satisfaction strengthens loyalty and reinforces the credit union’s brand in an increasingly competitive market.

Measuring the Impact

Successful eContracting goes beyond digitizing paperwork – it drives measurable improvements. To begin, credit unions should establish a baseline and track performance over time.

Key metrics to monitor include:

Time-to-fund: How quickly loans are funded after the member signs – a clear indicator of efficiency.
Look-to-book ratio: The percentage of approved applications that convert to funded loans, showing the effectiveness of the lending program.
Error rate: The frequency of missing or incorrect documents, indicating how well digital validation is reducing manual mistakes.
Processing efficiency: The number of loans processed per staff member, offering insight into productivity and resource use.
Dealer satisfaction: Feedback from dealership partners can reveal bottlenecks and guide further improvements.

Establishing clear benchmarks at the outset and revisiting them regularly allows credit unions to continuously optimize their use of eContracting, ensuring it delivers tangible benefits over the long term.

Adopt a Continuous Improvement Mindset

eContracting should not be viewed as a one-time technology upgrade, but as part of a broader digital transformation strategy. To fully realize its value, credit unions must treat implementation as the starting point, not the finish line. Through thoughtful measurement, consistent refinement and a focus on long-term impact, credit unions can ensure eContracting remains a dynamic asset rather than a static tool. This mindset of continuous improvement strengthens loan operations, builds institutional resilience and enhances competitiveness. As the pace of change accelerates, credit unions that embrace digital transformation and actively measure its impact will be positioned to deliver superior member experiences and be positioned for growth.