This post is Part 2 of 2 on our examination of auto finance trends, performance and compliance. Read Part 1 here.
While year-on-year delinquency rates are down overall, debt collection is still a fact of the auto finance industry. Subprime auto loans have higher delinquency rates, though not at a level that threatens the financial system (cars are much easier collateral to liquidate than homes, for instance). With lending on the rise—current total US auto loans are well over a trillion dollars—it’s imperative to do collections right.
Building a Better Collections Process
Various technology has been developed over the years to streamline challenging parts of the debt collection process, including repossession, and it continues to evolve. Software solutions allow lenders to manage the process of assigning or reassigning loans to external agencies for collections. License plate scanners and GPS devices provide information about the location of vehicles slated for repossession. Another technology, the starter interrupt device, even allows debt collectors to prevent a car from starting when the borrower is delinquent.
Best of All? Avoid Delinquency in the First Place
Easy, user-friendly self-service online tools help borrowers make payments any time, anywhere.
This is also an area where regulatory compliance is a major concern, and technology a major plus. Litigation around the Fair Debt Collection Practices Act (FDCPA) and Telephone Consumer Protection Act (TCPA) are at record highs. The legal activity around these laws, combined with likely changes to the Consumer Financial Protection Bureau (CFPB), mean that lenders have plenty to do to keep up with the latest regulatory guidance.
Luckily, technology now exists which can help them to ensure that their efforts to keep collections activity in compliance actually translate into compliant practices at the agent level. From audit-aware documentation to airtight workflows, solutions are available to guide compliance.
Feel free to contact us anytime at firstname.lastname@example.org to learn more about how technology is transforming the world of debt collections in auto finance and other sectors.