Is your refund strategy ready for a trade-in? Every year, automotive lenders issue millions of payouts for loan overpayments, lease deposits and the cancellation of aftermarket products, such as GAP insurance. But ensuring these refunds reach customers on time can be notoriously burdensome, with complex manual processes, high costs and regulatory risk.
Onbe, an industry leader in corporate payouts, has teamed up with Allied Solutions to reimagine automotive refunds for the digital era. Offering a comprehensive, digital-first approach designed to help financial institutions modernize, cut costs and offload risk, their collaboration delivers a refund experience that matches the speed and convenience of today’s automotive marketplace.
Swerving away from checks
Although borrowing experiences are now largely digital, checks remain the most common way to disburse automotive refunds. But paper refunds are labor-intensive and error-prone. They can cost up to $15 per check, with an estimated 80% of costs coming from exception handling and escheatment, according to Onbe data. And up to 30% of checks go uncashed, compounding the cost and burden of unclaimed property management. Beyond the expense, check-based processes expose lenders to unnecessary complexity and regulatory risk by requiring significant manual effort to reconcile exceptions, escheat unclaimed property, and prepare for audits.
Switching to modern payment methods helps lenders reduce errors, automate manual exceptions and unclaimed property handling, and easily track payments. Digital refund solutions enable faster payment delivery with built-in audit trails, allowing financial organizations to stay ahead of evolving regulations and decrease their compliance risk.
Boosting borrower satisfaction
Reducing or eliminating check-based refunds delivers a better experience for borrowers, too. 88% of automotive consumers think digital payments would be more convenient than a check in the mail, according to Onbe’s 2024 Auto Lending Survey. Recipients appreciate getting their refunds faster, via a mobile portal that’s more aligned with the pay-in experience. The improved security and transparency of digital payments offer peace of mind, especially since check fraud is on the rise. And because digital payments have fewer delivery issues, lenders typically see an increase in payment deliverability and a reduction in call-center escalations related to late or lost payments.
Onbe’s refund options include virtual cards offering compatibility with mobile wallets and popular payment apps, along with ACH and other legacy payment methods to meet a wide range of preferences. Consumers opt for different payment types depending on the amount they are owed and how they plan to spend their funds. So, offering choices makes the experience more personalized, increasing borrower satisfaction.
Preparing for the future
As automotive lenders continue to weather economic shifts, complex regulatory changes and evolving consumer preferences, now is the time to ask whether check-based refunds still serve your organization’s needs—or if a more modern solution is the key to staying agile and ready to meet future challenges. For the lenders that rely on Allied Solutions and Onbe to streamline and simplify their refund processes, going digital is the clear path toward reduced costs, risk and operational burden, as well as a more convenient, choice-driven recipient experience.
