Did you know that the term “light-bulb moment” is listed in the Oxford Dictionary? The term is defined as: A moment of sudden realization, enlightenment, or inspiration. And just recently, while attending the Collections and Recovery Solutions conference, we visited with a lender that had one such moment.
As we have talked with people at various trade-shows, we have seen hundreds of light-bulb moments, where they suddenly see the value of vehicle location data and how it can work for them. This time, we were explaining how lenders use vehicle location data to make right party contact by getting vehicle location data that gives them alternative data to the comp report. Using our vehicle location data fueled by over 4 billion vehicle sightings and over 100 million more gathered each month, we provide lenders new DRN Locations. And lenders use those locations to help make right party contact.
Give Field Service Agents the Right Tool for Right Party Contact
This lender talked about how they are reverting back to the use of “door knockers,” more properly called field service agents. Some say they are old school, but when a field services firm like SCR Group is armed with the right data, field calls are extremely effective. Scott Reynolds from SCR Group added, “The last thing a lender wants to do is repossess the collateral. With quality vehicle location data from DRN coupled with the strategy of compliant field calls you maximize the probability of re-establishing communication between the lender and their customer. More often than not this leads to a promise to pay and a cured loan, avoiding a costly repossession. Typically, lenders request field service firms’ agents to attempt contact to locations they ‘think’ are best. Now, with address scores and DRN Locations, a lender is able to provide a more accurate location for directing field agents based on vehicle sightings.”
Back to that lender we were chatting with, the light bulb went off when they realized that a door knocking strategy supplemented with vehicle location data could yield even better results, producing more payments and less repo assignments going out into the field. This lender even remarked, “You would be stupid not to use field service agents plus vehicle location data to help cure loans.”
Are Your Collection Practices Insane?
Insanity is doing the same thing over and over again and expecting different results. Yet, that’s exactly what we are seeing with many auto lenders who turn to us for help. They employ the same collections practices and in return they are seeing higher charge-offs rates. In fact, we’ve seen some report an increase of 200% for skip charge-offs in the last month. Let’s face it, once you’ve charged-off a debt, you’ve lost – taken a hit to your bottom line.
We know that some subprime borrowers are getting better at avoiding collections. In 2014, the Federal Reserve Bank of New York reported that more than 1 in 7 adults is being pursued by debt collectors in the U.S. And, these borrowers often owe multiple lenders. There is always that segment that ducks legitimate collections efforts, and as a result, charge-offs are on the rise.
“Close to one-third of the banks that originated or held on their books subprime auto loans anticipated some deterioration in the performance of such loans in 2015,” according to the Federal Reserve’s January 2015 Senior Loan Office Opinions Survey.
Lenders are catching on and are using vehicle location data to connect with borrowers trying to avoid payment. So you’ve tried contacting your borrowers at all of the locations provided, but that’s not working. What if you knew that their cars had not been seen at their home addresses for months, but had been seen at new locations? And now you can send a professional field service agent to those new locations, or you can mail notices to the correct address, augmenting your collections practice with insights that help you to connect with your customers. Access to these insights available through vehicle location data is subject to DPPA permissible use.
What’s the ROI?
Just think, if you have 200 delinquent loans that charge-off and each loan is worth $10,000 and we have DRN Locations on 10% (or 20 loans), your charge-off reduction could be $200,000. Now imagine the possibilities if DRN Locations were available on more than 10%? It’s highly possible depending on the area.
And here’s where it gets interesting. We decided to take the brakes off our vehicle location data giving you access to DRN Locations throughout the life cycle of the loan. You can make contact during servicing, locate cars for repossession and even make contact to prevent charge-offs. That’s a light-bulb worthy moment that adds up.