Could the secret to better returns on your auto loan portfolios be a “to-don’t” list?
As the year comes to a close, we often write our list of resolutions for the New Year. We decided to change it up and give you a “what not to do” list instead. Here is a “To Don’t List” for Auto Finance execs looking for new ways to generate better returns.
1) DON’T CHARGE OFF DEBT
Once you’ve charged-off a debt, you’ve lost. If you have 200 delinquent loans that charge-off, and each loan is worth $10,000…that is a sizable hit to your bottom line. What if you could mitigate as little as 10% (or 20 loans) of those losses using vehicle location data? Your charge-off reduction could be $200,000. Charge-off reductions of this size and even more are becoming a reality for lenders that refuse to accept charge-offs are simply the price of doing business. Vehicle location data is proving to be the missing link for them. What could it do for you?
2) DON’T GET THE WORST RESULTS FROM YOUR BEST COLLECTIONS PRACTICES
More than 1 in 7 adults in America are being pursued by debt collectors and these same adults often owe multiple lenders. Consumers burdened by more debt have become savvy at avoiding traditional collections tactics. Sure the comp report provides value, but what if you could go beyond the comp report. The Top 100 Lenders are fighting to remain competitive and the fight continues to lead them to vehicle location data as being a key factor for the upper hand– data that goes beyond the comp report and leads them to their debtors time and again. What if you knew that the address provided on the comp report was stale but you could have another, better address that could help you to make right party contact? And what if that data was available across the lifecycle of your customer’s loans? That data is vehicle location data and flat-rate enterprise level solutions like the one offered by DRN give you vehicle location data throughout the lifecycle of the loan to help you make contact during servicing, prevent charge-offs and locate cars faster for repossession. Because when you find the debtor, you know what to do.
DON’T GET FINED FOR DISPARATE TREATMENT
Disparate treatment can be overt or subtle, but either way it can add up to big hits to your bottom line and your reputation. And if you are using vehicle location data or other data and adding the cost for that data to the customer’s loan balance, you could be accused of disparate treatment. At the same time, we know that vehicle location data is incredibly valuable in helping you to connect with your customer or to locate a vehicle in repo. So what’s the answer? Enterprise level access to vehicle location data for a flat monthly fee that can be spread across your entire portfolio. Put a halt to the practice of adding fees to the customer’s loan balance and you may spare yourself costly CFPB fines and more.
DON’T THROW AWAY MONEY
Simply put, auto lenders who don’t use vehicle location data throughout their loans’ lifecycles are throwing away money. DRN’s customer studies show that auto lenders operating from a cost-based mindset fail to realize the ROI of vehicle location data and will see full balance charge-off losses increase, will experience more loans going to skip, therefore reducing their ability to write more loans and grow their revenue.
- Five Take Aways from the Collections and Recovery Solutions (CRS) Conference - May 31, 2017
- AFSA Issued a Hard Challenge for Auto Lending in the Big Easy: Innovate or Face Obsolescence - February 17, 2017
- Title Lender Boosts Recoveries by 23% - November 10, 2016
- Attention Credit Unions: You Really Should Be Better - October 24, 2016
- Invest in higher compliance standards. Invest in DBA. - July 6, 2016
- Door Knockers Plus Vehicle Location Data Cures Loans - June 21, 2016
- Catch Charge-Offs if You Can - March 25, 2016
- Buying Debt Using Vehicle Location Intelligence - February 26, 2016
- Lenders Show their Competitive Side at DRN’s Lender Roundtable - February 18, 2016
- Auto Finance Year End “To-Don’t” List for Better Returns - December 11, 2015