Underwriting – Don’t Wing It, Quantify It!

By Amir Dabiri - April 5, 2023

Underwriting, as defined by Underwriting: Definition, Process, How Long It Takes (businessinsider.com), “is the process of taking on risk in a financial transaction.” In the auto industry this concept is simple; the financial transaction is the purchase of the vehicle, and the risk is the loan not being paid back.

How do you determine when it is acceptable to take on this risk and make the sale? Do you go off your “gut” feeling because the customer sat well with you? Do you take their word on what they say their income is and what their expenses are? Or would you rather have a system that can quantify and assist you in verifying that information which is important to your decision to underwrite a deal?

Deal Pack’s built in Credit Application is capable of it! In Deal Pack’s Credit App, you are able to enter all your customer’s details, as well as any joint signer, and even create a Scoring Model for it. If you’re signed up for 700Credit, Deal Pack’s Credit App can bring in that information too.

The most important factor in underwriting is obtaining the customer’s information. You of course have the basic name, SSN/DOB, driver license, and address fields that you can enter. Deal Pack’s Credit Application takes it a step further by automatically running an OFAC (Office of Foreign Assets Control) check and providing fields for mailing addresses that are different from residential addresses.

You can enter information on the primary buyer such as previous address and previous employer. If the primary buyer has a joint buyer, you can enter the same information for them. Actually, being able to verify previous information on your primary buyer and/or joint buyer will help establish a good idea of who you are underwriting.

Another tool in determining if a customer is good a bet for underwriting is their credit report. Through Deal Pack’s integration with 700Credit, the largest provider of credit reports, you can pull a customer’s credit with the click of a button. All 3 major credit bureaus are represented: Equifax, Experian, and TransUnion.

So, you’ve entered all the buyer’s information and you’ve even pulled their credit report. All that information can be overwhelming to look at. Deal Pack’s Credit Application can quantify this information for you into a simple score using built in Scoring Models; A & B.

Scoring Model A calculates based on values given to the information filled in the Credit Application while Scoring Model B calculates based on values given to custom questions you create. Both scoring models can integrate values from the credit report pulled. Deal Pack’s Credit Application customizes the scoring to what your business considers to be pertinent to underwriting a potential deal.

The most difficult decision you can make in the auto industry is underwriting. Choosing what tools your business will use to make that decision is the second most important one. Don’t leave it to a gut decision.

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