"How many dealers do you have?"
If you're an indirect lender, that's probably your go-to question when speaking to technology providers or potential new partners.
That's because lenders have been conditioned to chase volume over the past 20 years, since there will typically be a high percentage of those applications that they will not underwrite.
On the surface, it makes sense. Higher volumes of app flow should equal more loans underwritten, because that's how it has always worked.
But it's a game of diminishing returns, for the simple reason that it's based on the flawed assumption that more dealer relationships automatically mean more qualified applications. In reality, the vast majority of applications aren't viable because they don't meet the lender's program criteria – but they still need to be processed, reviewed and rejected, wasting resources and impacting on efficiency.
In short, focusing on volume as an assessment factor could be costing you. Here's why.
The hidden cost of volume in indirect lending
Most indirect lending platforms allow dealers to submit applications to as many lenders as possible with minimal friction.
That's good for the dealers, but it means lenders must process a flood of inapplicable applications that are missing key documents or don't meet credit, income or vehicle criteria – costing time and money.
This is so common that most lenders have built in a 'loss ratio' to their underwriting workflows. They only expect to fund a small percentage of applications, and the rest are just part of the process.
Why does the volume-based mindset persist?
The main reason is that volume is easy to measure.
It's simple to report on dealer count and application volume, offering a sense of momentum even they mask inefficiencies.
However, fraud risks are rising, and operational budgets are tightening. Lenders should be asking not just how many applications they're receiving, but how many are likely to lead to funded loans.
That's because quantity without quality leads to slower approvals and time and money wasted on processing those applications.
What if there was a better way?
Some lenders have already begun to shift to quality over quantity by using platforms like OttoMoto® that embed lender-specific program criteria into the submission process itself.
The OttoMoto platform uses a traffic light system whereby dealers can see a red, amber, or green dot next to a lender's name. This means dealers can see whether a deal is likely to meet a lender's requirements before they hit submit, saving time and resources for everyone because it reduces the volume of applications coming through that don't meet the lender's criteria.
By giving dealers this kind of structured, in-platform guidance, lenders receive applications they'll actually want to fund.
And here's the best bit – OttoMoto only charges per funded deal. So instead of paying to process every application, lenders only pay when a loan closes – and save on underwriting resources by working only applicable apps.
Rethinking success in indirect lending
We know it's easy to assess platforms based on application volume. But in reality, that doesn't necessarily reflect performance or give an indication of how much underwriting resources will be wasted reviewing apps that don't meet your criteria.
Success in the indirect lending process starts with measuring what matters: approval rates, time to decision, quality and completeness of deal jackets, and funded deals. These metrics provide a much clearer picture of how well your dealer network is performing.
When program rules are embedded into the dealer's workflow (as OttoMoto enables), applications become more targeted. Dealers are more selective in the applications they submit to which lenders, and underwriters can focus on quality deals rather than obvious misses.
Not only does this approach result in a clean pipeline filled with high potential deals, it also:
- Strengthens lender-dealer relationships by building trust and setting clear expectations
- Improves the borrower experience by reducing delays in the buying process
- Helps compliance teams by provide accurate docs at the point of submission
- Reduces fraud by identifying applications with signs of fraud before they reach the lender
The key takeaway?
Lenders don't need more dealers; they need the right dealers submitting quality applications.
I know that sounds radical in an industry where volume has been king for years, but it's not a massive overhaul, just a smarter foundation.
It's 2025. It's time to move beyond legacy metrics and start measuring what leads to funded deals.
OttoMoto will play a key role in helping lenders scale without sacrificing underwriting quality or operational control – because volume is easy in indirect lending, but quality is everything.
I'd love to show you how OttoMoto could revolutionize your application workflow. Book a demo at a time that suits you or get in touch and a member of our team will be happy to help.
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