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A Primer On eContracting...........................................................3• What Is eContracting?• Why Is eContracting Important?• Who Is Involved in eContracting?

The Technology Behind eContracting.......................................5• Software as a Service (SaaS)• Integration• Electronic Signature• Validation• Contract and Forms• Contract Storage

Dealer Benefits of eContracting.................................................8• Faster Funding and Cost Savings• Increased Dealer Efficiency• A Better Customer Experience

Finance Source Benefits of eContracting................................10• It’s About the Customers• Streamlined Process• Capture More Business• Security

eContracting and Compliance....................................................12 • The Laws

• Compliance Automation• The Review Copy: A Customer-friendly Process

Table of Contents

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A Primer On eContractingThis eBook will cover eContracting from a number of angles, including: the technology that makes eContracting possible, legal and compliance considerations, finance source benefits, dealer benefits, and the future of eContracting.

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What Is eContracting?

As the name implies, eContracting injects technology into the auto and finance industry’s historically manual process of paper finance contracts, fax machines, and couriers. Through technology, eContracting enables dealers and finance sources to share critical contract documents and data, back-and-forth electronically, in a matter of minutes, not days or weeks.

Why Is eContracting Important?

A key benefit of eContracting is speed. Faster decisions, faster funding, and more efficient customer service. eContracting also reduces the potential for errors, like lost documents or missed compliance requirements. eContracting is also important because it streamlines and helps automate the entire contracting process, which means more time spent with customers making sales and closing loans, and less time spent pushing paper.

Who Is Involved in eContracting?

Consumers, dealers, and finance sources are, of course, involved in eContracting, but did you know RouteOne is a critical enabler that makes eContracting possible? From the finance application to credit and compliance checks, electronic signature capture to electronic distribution, and even storage of the finance package, RouteOne provides the technology behind eContracting.

A Primer On eContracting

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The Technology Behind eContractingNow that you have a basic overview of eContracting, the next focus is on the “behind the scenes technology” you need to consider when utilizing eContracting at your dealership.

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Software as a Service (SaaS)Technology is changing by the minute, and it is critical to fully consider what eContracting technology options make the most sense for your dealership. In the past, when you wanted a new technology, you often had to buy, host, and manage the technology yourself. Recently, however, a new option known as “Software as a Service” (SaaS) has emerged. With SaaS, the technology is completely managed and delivered by a service provider, usually over the Internet; saving you the IT burden related to self-hosting. In addition, SaaS often gives you the relief of knowing security and system updates are performed on a regular basis, so you don’t have to manage them on your own.

When looking for an eContracting solution, because of the complexity of the technology and other systems with which it will need to work, a SaaS solution will almost certainly be the best option for your dealership.

IntegrationToday, dealers utilize various Dealer Service Providers (DSPs). DSPs include Dealer Management Systems, Desking, Menu, Credit Reporting, and Online Applications, just to name a few. The same data is stored in system after

system. In many cases, that same data is entered manually time and time again. The power of integration allows these systems to automatically share common data, which saves your dealership time and minimizes errors. With eContracting, selecting a solution that is openly integrated to a number of DSPs and finance sources is critical, so that the data needed to generate an eContract is available without re-keying it in every time.

Electronic SignaturesElectronic signatures are becoming more common with car dealers, especially as the adoption of eContracting grows. If you are considering eContracting, be sure to research signature pads that are compatible with the eContracting software your dealership plans to use. In addition to dedicated signature pads, you will find that some tablets have the ability to produce electronic signatures based on the service provider utilized. The benefit of using tablets as signature pads is that they allow you to capture a signature without a wired PC connection and can be used for other purposes, like credit applications that consumers can complete themselves while in the dealership.

ValidationWhen considering eContracting solutions, make sure the solution you choose offers validation to notify you of errors as they happen. Proper

The Technology Behind eContracting

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validation will save you the time and hassle of dealing with a bounced contract. Validation also increases your customer satisfaction as customers will not have to return to your dealership to sign their contracts all over again if an error does occur (as can be the case with paper contracts).

Contract and FormsThink about all the forms and contracts that make up a final deal jacket. To move to eContracting, ideally all, but certainly the most important forms and contracts need to integrate and work seamlessly with your eContracting solution. Forms and contracts provided by common industry providers are likely already eContracting compatible, but this is something you will want to verify if you are making the decision to move to eContracting. Forms and contracts that are not ready for eContracting will either have to be customized or used as-is and scanned into the eContracting package for each deal.

Contract StorageOnce the customer contract has been validated and signed by the customer, your eContracting system should create the Authoritative Copy (“AC”) and securely store the AC for your dealership. This is a critical step, as there can only be one Authoritative Copy. Verify that your eContracting system stores eContracts in a safe and secure

environment until a finance source purchases the customer contract. Once the finance source purchases the customer contract (i.e. the dealer assigns the customer contract to the finance source), your eContracting system should transfer the ownership and the Authoritative Copy to the finance source.

The Technology Behind eContracting

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Dealer Benefits of eContractingWhat was once a concept of the future is now present in full force. Dealers around the country are adapting to the eContracting boom. Why are dealers so interested? Here a three key factors.

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Faster Funding and Cost SavingsThis may be obvious, but one reason eContracting is growing so quickly nationwide is, simply put, dealers want to get paid. Dealers who utilize paper-based contracts can see funding times of up to several days. Finance sources that utilize eContracting technology can now fund deals within the next business day and sometimes even within minutes. Because the contract and ancillary documents are sent electronically, dealers will also eliminate overnight mailing costs in addition to the man-hours used to handle shipping and deal with return contracts.

Increased Dealer EfficiencyDealers are seeing increased efficiency with eContracting. One way is validation. With eContracting, contract details are sent to the finance source before the customer signs the contract. During review, the finance source identifies any errors, which gives the dealer an opportunity to address those errors before proceeding in the eContracting process. Upon successful validation, the customer’s eContract is printed for them to review during the electronic signature process. Dealers will also increase their efficiency and save time through the utilization of DMS integration. Traditionally, from the credit application to the eContract, there is margin for error. By transmitting the data from the DMS

Dealer Benefits of eContracting

to the credit application portal via integration, you eliminate duplicate entry and minimize the likelihood errors can occur during the contracting process.

A Better Customer ExperienceWhat can be worse than asking your customer to come back and sign more paperwork due to a missed signature? Having your customer come back a 3rd and 4th time to sign more paperwork! eContracting has the potential to reduce unpleasant customer experiences by ensuring all required signatures are captured during the review process. This means the customer spends less time in your dealership and receives a better customer experience – a great indicator for a good grade on your CSI!

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Finance Source Benefits of eContractingChange is being driven by evolving consumer expectations, dealer demand, and the security and efficiency benefits eContracting offers to finance sources.

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It’s About the CustomersEvery day, customers are becoming more acclimated to the electronic signature process in many aspects of their daily lives. In many cases today, customers provide their signatures electronically via signature pads, tablets and mobile devices at the bank, shopping mall, and even the grocery store. More and more dealerships have also adapted to using electronic signature pads in their Service and other departments. Today, technology in dealerships is not only for eContracting!

Streamlined ProcessIncorporating eContracting technology automates the loan process, increasing efficiency by: reducing errors, decreasing delays due to missing data, manpower and time spent to fund each deal. As a result, it enables finance sources and dealerships alike to work smarter and better.

Capture More BusinessFinance sources participating in eContracting have a competitive edge over finance sources that don’t. Dealers want to get funded quicker and eContracting technology helps dealers accomplish this. Simply put, finance sources that offer eContracting are more likely to get more financing opportunities than those that don’t. To top this all off, finance sources can eliminate the cost of courier fees, making this a win/win for both the finance source and the dealer.

SecurityThe technology that drives eContracting can make handling the documents involved in a dealer’s contract package more secure. Once the finance source validates the data initially sent by the dealer, the electronic contact and all of the ancillary documents are created and the electronic contract is digitally signed and stored within an electronic vault. All of the customer’s data and related documents (credit application and ancillary documents) are securely stored electronically. This reduces the number of hands that need to touch a contract package and the likelihood of the documents getting lost in the mail.

Finance Source Benefits of eContracting

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eContracting and ComplianceAlthough eContracting has been around for a long time (we have been entering into electronic contracts for years at department stores and grocery stores every time we sign a signature pad), financing or leasing an automobile through the use of an electronic contract is still a relatively new experience for customers and dealers alike.

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The LawseContracting was legislatively authorized early on, as the federal government and each state’s government recognized how important eContracting would become to business and government transactions. The Electronic Signatures in Global and National Commerce Act (ESIGN) was signed into law June 30, 2000 and the Uniform Electronic Transactions Act (UETA) was promulgated by the Uniform Law Commissioners in 1999. To date, UETA has been enacted by 47 states (3 states have enacted eContracting laws other than UETA). The ESIGN and UETA laws have given almost all electronic signatures and contracts the same legal effect as written signatures and paper contracts. More specifically, the laws provide that signatures and contracts may not be held invalid or unenforceable solely because they are in electronic form or have been electronically executed; thus removing a key difference between paper contracts and physical signatures and electronic contracts and electronic signatures, by applying the same legal principles of contract law to both.

Compliance AutomationThese laws eliminated the legal objections to electronic contracting! What happened next was truly amazing. Technologists (or what we like to call “computer geeks”) discovered that by converting a historically paper contracting process to an

electronic process, inefficiencies could be removed, contract terms could become more reliable through validation (no mistakes), and customers could become more informed. The Review Copy: A Customer-friendly ProcessA customer-friendly eContracting process will allow the customer to review the contract terms before they are required to sign the contract. This can be accomplished by simply printing a fully completed customer review copy of the contract. The review copy is a very economical single ply copy printed on a laser printer and is intended to allow the customer to review the terms and conditions of the contract before signing. If the customer wants to modify the contract, it can easily be done and a new review copy can be printed and given to the customer in minutes. The review copy provides the customer with a point of reference for the terms to which they are agreeing, and when it comes time to sign the contract, it can be completed quickly and efficiently via an electronic signature pad.

Take a minute and compare the eContracting process with the traditional process of printing out a multi-part contract on an impact printer and handing it to the customer for signature. If the customer wants to modify the contract, the dealer must go through the time, trouble, and expense of re-printing a very costly, multi-part contract. With

eContracting and Compliance

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eContracting, the dealer merely needs to update the appropriate fields and click to print a review copy!

eContracting also allows a dealer to send the contract terms to a finance source for validation. This ensures that the terms are both reliable and compliant (truth-in-lending, taxes and fees, and approved amount financed, to name a few), thus eliminating contract re-writes and calling the customer back into the dealership to sign the whole deal over again.

Additionally, the most common reason for returning a contract to the dealership is an unsigned contract; an eContracting system has safeguards in place to inform the dealer that a signature is missing and prevents the eContracting process from proceeding without the missing signature. These validation points and data-entry safeguards ensure a more efficient, compliant, and informed customer contracting process.

eContracting and Compliance

January 2013-January 2014

eContracting continues to accelerate with faster decisions,quicker funding, and more efficient customer service.

With eContracting, dealers and finance sources can sharecontract documents and data electronically in a matter of minutes.

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Interested in eContracting?See how we can help you move forward. Contact your

local Business Development Manager, visit routeone.com or call us at 866.768.8301. We’re here to help you!

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