Change the outcome that will lead to lower charge-off losses and increase ROI on your portfolio.
Let me introduce you to John. John lost his job and was no longer able to make payments on his loan. John did not notify you, the lender, therefore resulting in the situation below.
Let me paint the picture of how John’s loan would have typically been handled.
- John’s loan is 30 Days Past Due (DPD)
- Your collections strategy of using an auto dialer for the next 20 days yields no success.
- It’s now 50 DPD and you’ve started some light skip work for the next 10 days – no success.
- It’s now 60 DPD and you’ve had no contact. You are ready to assign this account out for repo.
- You run thru 2-3 repo vendors over the next 40 days – still no success. The account is now 100 DPD.
- You now assign it to a skip and repo vendor for the next 20 days – still no success.
- The loan has reached 120 DPD and has now charged off.
- You just booked a full balance charge-off loss of $10,000.
- You now place this account with national forwarding/skip company that can facilitate a live pickup empowered by License Plate Recognition (LPR) data and the car is repossessed – success!
Without proper data insights, John’s world changed without the lender knowing, therefore increasing the risk of charge-off.
Here is the real story.
John lost his job in Dallas, TX at 30 DPD. At 90 DPD, he moved 800 miles away from the home and work addresses on file and moved in with a friend in Denver, CO. At 120 DPD, John secured a new job and is back on his feet. Not long after the vehicle was recovered, John received his first pay check from his new employer and had the ability to pay his auto loan. LPR data could have changed how the lender handled this account. A better outcome, with better ROI.
Now let’s walk thru some “what if” scenarios:
LPR data is a powerful predictive data source for customer travel patterns. (People are within 1000 feet of their car 90% of the time). LPR data consistently confirmed your customer was within 1 mile of their previous work address for 6 months prior to delinquency.
What if you used LPR data to score your customer’s work address at 30 DPD?
Answer: You would have seen a red flag because LPR data would not have confirmed the vehicle near John’s work address.
What if you accessed LPR data at 90 DPD?
Answer: You would have noticed John’s vehicle was spotted at a residential address in Denver, CO.
What if you accessed LPR data + Phones at 110 DPD
Answer: You would have seen a cluster of 5 scans confirming John at a residential address in Denver, CO. With a confirmed new DRN Location, you could find a phone number associated with this location.
What if you used this new phone number and successfully contacted your customer?
Answer: You just gave yourself a chance to talk to John and understand his situation. Because you would rather keep John in his car, you work out a payment plan and avoid repossession. Most importantly, you avoid a loss!
So there’s your “what if” scenario. Using DRN’s vehicle location data early and throughout the collections cycle keeps customers in their cars and helps you avoid losses.
- How Migration Studies Can Help Lenders During and After COVID-19 - May 11, 2020
- From Tech Trends to the White House: Perspectives from the AFSA Vehicle Finance Conference and Expo - March 5, 2020
- Waiting-to-Lose Strategy is No Strategy - August 18, 2016
- Not Looking at Auto Debt? You’re Missing Out. - January 18, 2016
- Setting Yourself Up for Disparate Impact or Disparate Treatment Issues? - November 13, 2015
- Stop Getting the Worst Results from Your Auto Collections “Best Practices” - October 19, 2015
- Why Cost-Based Decision Making May Be Costing You - October 8, 2015
- LPR Scores Prevent Charge-off Losses - October 2, 2015