Several well-known methods of credit origination exist for use in financing the purchase a product such as a motor vehicle. In one conventional credit origination method, a customer for a product approaches a dealer of the product and submits an application for credit to the dealer (third party). The dealer then presents the credit application to a lender and represents the customer before the lender. The decision by the lender whether or not to extend credit to the customer, along with the terms of any credit that is extended, are then provided to the dealer who may adjust the terms to provide its own markup to the extent allowed under applicable laws. Finally, the dealer communicates the credit decision and terms to the customer and the dealer and customer enter into contracts for the purchase and financing of the product. Implementing this conventional credit origination method in an electronic environment (e.g., over a computer network such as the internet) has several drawbacks. First, the method is inefficient. If the lender needs to obtain more information from the customer in order to make a credit decision, the lender would go through the dealer. As a result, processing of credit applications is delayed and the lender is often unable to obtain sufficient customer information to make an appropriate spread of credit decisions. Second, this conventional method fails to recognize consumer expectations regarding an electronic-based financing process, including timeliness and the receipt of information with respect to the credit decision and terms.
In another conventional credit origination method, a customer for a product approaches the lender directly and submits an application for credit to the lender. The lender processes the credit application and the decision by the lender whether or not to extend credit to the customer is communicated to both the customer and a dealer of the product. The terms of any credit are also communicated to the dealer who may adjust the terms to provide its own markup to the extent allowed under applicable laws. The terms are not communicated by the lender to the customer, however. The dealer communicates the terms of the credit to the customer and the dealer and the customer enter into a contract for purchase of the product. This credit origination method also has drawbacks. As in the first method discussed hereinabove, this method fails to recognize consumer expectations regarding the financing process—in particular, the receipt of information with respect to the credit decision and terms. The customer is forced to visit a third-party, the dealer, prior to obtaining any information as to the potential terms of any credit that may be extended to finance the customer's purchase.
In yet another conventional credit origination method, a customer again approaches a lender directly and submits an application for credit. The lender processes the credit application and communicates a decision whether or not to extend credit to the customer along with the terms of any such credit. The customer enters into an agreement regarding the terms of credit with the lender and then presents the agreement to a product dealer who fulfills the purchase. Although overcoming some of the drawbacks encountered in other conventional credit origination methods, this method has its own deficiencies. In particular, because an agreement is reached before the customer visits the dealer, the lender loses an important vehicle for verifying certain information provided by the customer and has increased risk. Further, because the dealer is uninvolved in establishing the terms of the credit (i.e., is unable to introduce a markup on either the product or the financing), the dealer no longer has an economic interest in the transaction. As a result, the dealer may refer the customer to another source of financing.
There is thus a need for a method and system of credit origination that will minimize or eliminate one or more of the above-mentioned deficiencies.