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Automating Auto Lending for Easier Loan Processing

automating auto lending

Long, complex approval cycles are a common problem for auto lenders. They can take a long time to process as lenders struggle with outdated manual workflows. Thankfully, automating auto lending can shorten the approval cycle for the customer while reducing risk and cost for the lender.

The Approval Challenge for Auto Lenders

Lenders are handling auto loans in record volumes. The overall dollar volume of these loans rose by a third year-on-year in mid-2021. Lenders are also operating in an incredibly volatile time as pandemic-based loan forbearance programs, stimulus checks, and a trend towards refinancing have made it more challenging than ever to evaluate creditworthiness.

Against this backdrop, lenders are coping with the same problems as everyone else: pandemic-fueled staff shortages that leave them doing more with less.

Automation Accelerates Successful Approvals

Automating auto lending offers loan companies a competitive edge. It begins with digitization, capturing paper-based documents from applicants into digital versions that are easier to manage. Digitizing pay stubs, bank statements, and IDs removes cumbersome paper from the process.

Digitization alone doesn’t fully unlock the power of automation. Applicant information is still locked inside those electronic documents, forcing a lender’s agents to review and analyze them manually.

Full document automation in auto lending uses artificial intelligence (AI) to extract the relevant information from these documents to power digital workflows. As it extracts that information, the automation system validates that it is correct. It can cross-reference data across documents to verify employment and address data as accurate and legitimate.

Automation systems can also use the derived data to calculate an applicant’s net income. This is especially useful when an applicant has diverse employment profiles embedded across several documents. It distills fragmented paper-based information that is difficult and time-consuming to read into an easily digestible picture describing an applicant’s cash flow.

Automation doesn’t take people out of the equation. Instead, a human-in-the-loop automation solution like Ocrolus takes care of the difficult tasks while enabling lenders to use their underwriters more productively. Data capture, validation, and classification, along with fraud detection, all happen before an underwriter even sees the information.

Automating auto loans enables underwriters and other loan officers to concentrate on the value-added parts of the auto lending process while also delivering extra intelligence to help power their decisions. 

The Benefits of Automating Auto Lending

Automation brings an array of benefits to auto lenders just when they need it most, including the following:

Compliance

Consistent workflows support compliance with state and federal regulations, including the Truth in Lending Act and Equal Credit Opportunity Act. Auto lending automation enables lenders to follow predefined rules more closely while giving them a reliable digitized record for auditors to follow when evaluating their compliance.

Shorter Processing Times

Automation compresses document indexing and processing times, making lenders more efficient. Paperwork has a bad reputation for a reason: transferring stacks of documents between different team members is slow and cumbersome. Removing the paper from the equation streamlines the exchange of information between agents and borrowers. It means no more waiting for half a day for an agent to go through someone’s pay stubs.

Improved Performance Evaluation

Automation doesn’t just compress the approval cycle and bring faster results to applicants – it makes it easier for lenders to analyze their performance. Access to digital information and data also helps lenders identify bottlenecks in their lending processes, both internally and when dealing with partners such as underwriters. It creates a continuous improvement platform that allows lenders to differentiate themselves from the competition.

Automating auto lending is an obvious step to help take the friction out of the submission and approval process. Ocrolus has honed its intelligent automation products to capture and classify applicant documents, extracting information quickly and at scale.

Learn more about how Ocrolus can automate auto lending by booking a free demo today.