Auto lenders turn to AI to cut loan processing costs and time

Auto lending—like almost every other industry these days—is undergoing a profound AI-driven transformation. 

The promise: Faster approvals, fewer human errors, and major cost savings. But for many in the industry—the shift isn’t exactly comfortable.

Right now—about 80% of new vehicles in the U.S. are financed, and every one of those loans comes with a stack of paperwork—40 to 80 pages per deal. 

• Lenders have to manually process, verify, and ensure everything is compliant, which adds up to millions of hours and a ton of operating costs.

• But AI technology can scan documents, verify identities, and crunch thousands of data points in seconds—things that humans simply can’t do at scale.

For example—Upstart, an AI-driven lending platform is investing heavily in auto refinance automations. The goal is to eliminate the need for consumers to upload documents and reduce manual work in the approval process.

• And Capital One just rolled out Chat Concierge, an AI-powered tool designed to help dealerships answer customer questions and explore financing options. 

• The system uses multiple AI “agents” working together under a master AI to assist both dealers and buyers in real-time.

Why it matters: According to PwC, automating data extraction alone can slash 30-40% of the hours spent on manual data entry. That means lenders can process loans faster, make decisions more efficiently, and potentially offer better rates.

But some dealers are skeptical: A J.D. Power study found that 55% of dealer finance teams are uncomfortable with AI determining loan approvals—a 5% increase from last year. 

• Their biggest concerns? Losing human interaction, AI’s lack of flexibility, and the potential for job displacement.

• For dealers—lending is about working through complex situations, understanding a customer’s unique financial picture, and making judgment calls that AI simply can’t.

• And while AI can flag fraud risks and automate background checks, many dealers worry that it could also miss important nuances that a human would catch.

Bottom line: AI is transforming auto lending, simplifying what was once a time-consuming, paper-heavy process. But not everyone’s convinced it’s a win for the industry.

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