How indirect lending works
The dealer submits the application to several lenders through a dealer platform, chooses an offer and assigns the signed retail installment contract to that lender. The lender checks the funding package before paying the dealer.
Why lenders use it
Indirect lending gives banks, credit unions and finance companies access to borrowers at the point of sale, in volumes few could reach through their own branches. In exchange lenders compete on speed and service as well as rate, since dealers favor those that decide and fund quickly.
Where the work is
Every funding package must be checked against the approval, including the contract terms, open stipulations and add-ons such as GAP coverage. A package with an error or missing document goes back to the dealer, delaying funding and straining the relationship.
Where automation helps
Automated funding review checks every document in the package against the approval and the lender's rules and lists the exceptions for a funder. Clean packages fund sooner, and problem packages go back to the dealer with every issue listed at once.