6 Essential Use Cases For Streamlining Auto Loan Origination Workflows

The auto lending industry is highly regulated and often has very stringent KYC rules for loan originations. Due to complex approval criteria and highly variable stip requirements, lenders may spend excess time trying to figure out which stips are needed, which are sufficient, and which fields within forms are relevant to which borrowers. Today’s fast-paced business environment means that customers should know exactly which information is needed, and be able to submit it digitally in one go with zero hassle and guesswork. That’s where workflows come in. Automated digital workflows are a type of business process management (BPM) solution. These workflows use conditional logic to ensure the highest levels of accuracy and continuity both within steps and between steps in the originations process. Automated workflows allow representatives to approve more auto loans, faster, and with greater adherence to compliance requirements.

Why Automate Auto Loan Originations With Digital Workflows?

Automated workflows allow loan officers to provide a seamless and compliant loan originations experience every step of the way. Unlike traditional manual processes that leave everything to the discretion of the officer, automated workflows ensure that a predefined sequence is automatically generated based on conditional logic. And unlike robotic process automation (RPA), which generally focuses on automating discrete tasks, digital workflows streamline the end-to-end process. The best workflow solutions require zero coding, allowing the auto lender to adjust the workflow on the fly in response to changing business or regulatory needs. This makes it a good choice for lenders that prioritize staying agile. And let’s face it — in today’s world, with great customer expectations for easy and digital auto loan applications, this is top-of-mind for many future-focused insurers. Here are some of the biggest benefits of automating the full auto loan origination process:

• Simplified processes: A single system bridges the document collection gap in the origination process with a simple drag-and-drop interface.
• Digital tools in one digital suite: At various stages of the workflow, rules trigger the sending of requests for stips, eSignatures, and photo ID, as well as sharing disclosures such as T&Cs for customer approval.
• More streamlined processes: Easy and intuitive conditional rules can be set to ensure business logic at every stage of the application process.
• Optimized: Each interaction can be optimized across touchpoints and existing systems.
• More visibility: Digital workflows come with dashboards that allow business leaders to gain visibility into the KPIs that matter most, such as time to funding, application completion rate, and time to collect stips.
• Zero coding required: Project managers can adjust their business rules according to their needs without requiring IT support or coding.

6 Essential Use Cases For Automating Auto Loan Originations

Automated workflows trigger requests for borrower information or action based on the requirements of their state, credit score, and more. Loan officers can instantly request the relevant stips, generate relevant forms, put together offer summaries, and send T&Cs. In addition, there are options for self-service. Admins can quickly make modifications to any of these steps without the need for coding. Furthermore, these workflows can all be carried out digitally through collaboration between the loan origination system (LOS) and the customer’s mobile phone. Here are the workflow functionalities that correspond with key auto loan origination use cases:

1. Quick Stip Collection

During the stip collection process, the prospective borrower must submit any number of stips, including:

• Pay stubs
• Proof of total household income
• Payment history
• Bank statements
• Tax returns

Yet here’s the catch: not all borrowers should need to produce the exact same documents. For example, some lenders may prefer to ask for more stips from new or subprime applicants. Should the customer’s credit criteria meet a certain threshold, the lender‘s workflow can automatically trigger requests for more stips. Lenders may choose to reduce the stip requirements for customers with specific credit profiles. All of this can be set up in the admin’s console, ensuring an efficient and personalized stip collection process. A typical document collection procedure works as follows:

1. Logic built into the workflow allow the admin to determine which stip requests are sent to which customers.
2. The appropriate stips are requested from the customer.
3. The customer snaps smartphone photos of their documents, which are automatically sent to the loan officer for review.

2. Smart Loan eForms

Smart forms based on conditional logic allow loan officers to generate dynamic, highly relevant forms. Fields only appear when a customer ticks a checkbox or selects a particular option from a dropdown, indicating that a specified condition is met. Here is a typical process for setting up smart forms based on conditional logic:

1. Create a rule for the trigger field. (E.g., If the customer ticks a box that says “currently working” then the field will populate asking for monthly net income).
2. Select which additional fields to show if the customer’s response in the trigger field complies with the rule (the fields can be of any type: checkboxes, radio buttons, dropdowns, or text responses can all trigger a conditional workflow).
3. Create additional rules for a trigger field based on the customer’s response. (E.g., If the customer lists monthly income as “$1,500” then they will be shown a field asking about any other open loans. If the customer lists monthly income as “$8,000,” they won’t see this field as they are in a lower risk category).

By showing and hiding fields depending on the borrower’s responses, completion time is reduced, and customers are less likely to make errors or leave fields blanks. In addition to streamlining the in-form process, logic can be applied between different forms (if relevant) to determine if a form needs to be presented based on the customer inputs on previous forms or in API.

3. Offer Summary

Once the application has been processed and the application is approved, a summary of the loan terms is produced and sent digitally to the customer (alternatively, an adverse action notice can also be sent digitally). Ideally, this summary should include information about the collateral, loan term length, loan amount, interest rate, state sales tax, documentation fee, registration fees, and add-ons (like extended warranties or gap insurance). Once the loan is approved, the loan officer’s workflow triggers the following actions:

1. A full offer is produced through the platform, including all the fine print.
2. A dynamic document preview appears on the loan officer’s screen so they can review it.
3. The workflow triggers the sending of the offer summary to the customer.
4. The customer provides an eSignature, turning the offer summary into a legally binding PDF document that will be part of the session evidence.

4. Single-Page Terms and Conditions (T&Cs)

Terms and conditions (T&Cs) vary depending on the different parameters of the agreement with the approved borrower. Depending on the loan terms, there is usually a corresponding T&C paragraph. While it’s certainly possible to save every T&C document in a separate PDF template, this slows down the time-sensitive loan origination process. With automated digital workflows, there is no need for loan officers to search for the right T&C template. Using dynamic documents, it is possible to create multiple sections on the same HTML document, add a section for each T&C paragraph, mark those paragraphs as objects, and apply conditions on them. This way, loan officers can send a single dynamic document that includes all the T&Cs — straight to the customer’s cell phone for approval. Here is how the disclosure procedure works:

1. The workflow automatically generates a T&C based on the agreed terms, such as length of loan and monthly payments.
2. The T&C PDF or web form appears on the customer’s cell phone, where they can read it and check the approval checkbox.
3. The loan officer is instantly notified of the customer’s approval.
4. If needed, a request for an eSignature is also triggered.

5. Easy Self-Service

Not all auto loan applications warrant direct involvement from a loan officer. Some lenders, especially those serving prime customers, may feel comfortable enabling a fully self-service loan application process. Automated digital workflows make it easy for lenders to embed the entire application process into an email body or website. This is very helpful for attracting prospective borrowers with high credit scores and straightforward application requirements. Lenders can save on manpower and processing costs by allowing borrowers to apply online without speaking to a loan officer on the phone. Self-service workflows also allow existing borrowers, whose information is already in the system, to submit loan modification requests in a low-touch, convenient fashion. If needed, a servicing staff member can always call or text to follow up. A typical self-service experience can look like this:

1. Customer goes to the auto lender’s webpage or calls into an IVR, and a car loan application appears on their screen.
2. If the customer already exists in the system, the digital form is pre-populated with their details, so they only have to fill out certain new fields.
3. If the customer is new, they can fill out loan application forms, upload stips, read and consent to T&Cs, and authorize ACH payments.

6. Customizable User Interface

Potential borrowers who go through an automated digital workflow are interacting with the simplest of interfaces: text message. Nonetheless, once they click on the link inside the text message, they will be driven to a mobile portal where the look and feel should reflect the lender’s brand. Here are a couple of way originations teams can customize their user interface and functionalities:

1. Add images sized to HTML templates and font colors.
2. Change the color of the template.
3. Push data to the workflow via URL or API.
4. Easily build and manage as many unique workflow URLs as needed.
5. Redirect to a page when the workflow is completed, or notify the parent window that the workflow is complete.

Digital Workflows for Automating Auto Loan Originations

Automated digital workflows help auto lenders dynamically build and tweak processes to satisfy business and regulatory demands. Conditional workflows allow loan officers to breeze through the process with prime customers, and collect more collateral from riskier subprime borrowers. This ensures that lenders find the optimal balance between compliance and speed — requiring more or less KYC paperwork as needed. Automated workflows recognize that there is no one-size-fits-all loan application process, and adjust accordingly. Lightico uses such a workflow automation solution that uses conditional logic to streamline the end-to-end loan origination process. The platform includes eSignatures, smart eForms, digital T&Cs, co-review of offers, automatic payments, self-service, and many other capabilities. Learn more at Lightico.com.