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5 Reasons Your Indirect Lending Program Is Bleeding Money — and How MAGO Solves It

Picture of Jamie Lovell, COO

Indirect auto lending is a massive channel—but inefficiencies quietly erode profitability. Here are the top five pain points for community financial institutions (CFIs), with real data, and how Shastic’s MAGO platform fixes them without replacing your LOS.

 

1. 90% of Auto Loans Originate Indirectly—It’s Your Biggest Volume, But Also Your Biggest Risk

  • Pain: Nearly 75% of consumer auto financing flows through dealership networks—not branch or digital channels (mckinsey.com). That volume brings complexity, manual handoffs, and quality risks.

  • MAGO Fix: Automates document and stipulation workflows inside your LOS, reducing risk in a high-volume channel without needing a full system overhaul.

 

2. High Rework Rates Drain Labor and Margin

  • Pain: Up to 15–20% of indirect loan applications require manual correction due to missing documents or compliance errors. At $40–$50/hour in labor costs, that quickly adds up.

  • MAGO Fix: Instantly flags missing items and nudges borrowers via SMS. Clients report 55%+ reductions in rework, saving staff hours—and dollars.

 

3. After-Hours Dealer Packets Often Wait Until Morning – Delaying Funding

  • Pain: Dealers often submit packets after hours or at end-of-day. Industry benchmarks show 40–50% of dealer funding packets are sent after 4 p.m., meaning they sit untouched overnight. Each extra day to fund can cut pull-through by up to 5%. MAGO can’t work until the packet arrives—but once it does, MAGO immediately reviews and routes it, ensuring apps are ready when you are.

  • MAGO Fix: Reduces app-to-funding times from days to under four hours, accelerating pull-through and increasing funded deals.

 

4. Scaling is Costly – You Need Headcount for Growth

  • Pain: Indirect volume must grow to meet market demand—but your team has limits. Hiring more staff kills ROI.

  • MAGO Fix: Automates repetitive tasks so your current team can manage 20–30% more volume without added labor.

 

5. Slow and Clunky Processes Frustrate Members & Dealers

  • Pain: Delayed funding, missing communication, or unclear instructions frustrate members and dealers. That erodes loyalty and referrals.

  • MAGO Fix: Offers fast, seamless interactions via preferred channels—no additional logins required—boosting satisfaction and retention.

 

Bottom Line: Real Impact, Measured ROI

Between processing automation, rework reduction, and pull-through improvement, MAGO generates real savings—often >$200,000/year for institutions processing 500+ loans/month. No rip-and-replace, no core conversion—just smarter lending using your existing LOS.

 

See your custom impact—use our Indirect Lending ROI Calculator now.