COVID-19 has created a unique situation for DRN and our lenders. With communities nationwide in various stages of shutdown, businesses closed, and many people working from home or – unfortunately – unable to work, there are fewer cars on the road and more staying parked at home. This has enhanced DRN’s ability to locate vehicles and verify accurate addresses. We realized this situation could provide some interesting insights for lenders.
Hypothesis: As people are sheltering in place for extended periods of time, they may be doing so with family or friends. This means borrowers are likely moving to new addresses while they ride out the pandemic. While planned as short-term changes, these moves may become longer-term depending on the length of the shutdown and individuals’ family and job situations.
Plan: Analyze the portfolio of one of DRN’s subprime clients (nearly 205,000 VINs and borrower addresses) in January, February and March 2020 to find license plate scans that were more than 50 miles from borrowers’ stated addresses.
Findings: As we expected, our analytics showed a significant increase in borrower migration during the pandemic. In January, movement of more than 50 miles from the stated address was 4.2% of the portfolio. By March, it had grown to 10.5% – an increase of 125%.
So why is this important? This migration study can be a model for lenders as they navigate the COVID-19 shutdown and begin planning for how to restart their businesses once recovery begins. We heard in our April COVID-19 webinar that many lenders are being flexible in their loan terms as individuals deal with the unusual financial hardships created by the pandemic. Being able to locate and contact borrowers during this uncertain period is invaluable – not only in terms of collections but also in the ability to provide a personal, empathetic level of service to customers who may be experiencing financial hardship.
If you’re interested in learning more about how a DRNsights migration study can help your business both during and after COVID-19, contact email@example.com.