In the past five years, the percentage of auto loans with 90-day-plus delinquent balances – a situation that typically results in a repossession of the vehicle — increased by 77.7% to about $22.6 billion, according to a Finder.com analysis of the New York Federal Reserve’s most recent Household Debt and Credit Report.
That’s bad news for auto lenders who realize they’ll likely be upside down after repossessing a car, reselling the vehicle, and attempting to collect the deficiency balance. Factor in decreasing disposable incomes due to rising interest rates and higher debt loads (particularly with automotive and student loans) and loans will become increasingly difficult for consumers to afford.
Today’s consumers are tech savvy and expect an omni-channel experience, driven by their preferences. They expect the same level of capabilities and options from you as they do from Amazon—and better customer support to boot. Katabat’s platform powered by our proprietary machine-learning technology learns from customer responses, finds patterns, and continuously optimizes communications strategies.
Get an Early Start
We’ addressed some of the challenges facing auto lenders in 2018 posts (go here and here). So, how can you maximize repayment and minimize repossessions when it comes to auto loan collections?
Be proactive in addressing delinquencies and go beyond letters and calls with SMS and e-mail. Gain customer consent for digital communications now, before signs of financial stress appear. Monitor accounts closely to assess changes in a customer’s ability to pay, and quickly reach out with timely, flexible payment solutions.
You know that data you’re collecting?
Make it work for you. Analyze the information you have and use it to optimize your credit policies. Be prepared to offer individualized solutions to auto-loan collections customers (not one-size fits all) and address hardships with loan-modifications.
- Do you have a 360-degree view of your customer relationship and account data?
- Can you use sophisticated analytics and automated workflows to support tasks ranging from loan qualification to locating non-responsive borrowers?
- Have you implemented a truly integrated omni-channel platform that allows communication with borrowers through their preferred channels at a time that’s convenient for them?
If you are answering “no” to one or more of these questions, you need to prioritize more robust software that provides you with the capabilities to execute on these critical tasks.
A comprehensive solution will help you strategize and build customer loyalty across every stage of debt collection, including digital collections, debt placement, hardship, and recovery accounting. When you are proactive and understand your customer’s needs, they’ll be better able to stave off delinquency and retain their credit rating.
An all-inclusive view of customer activity and past communications makes connecting with borrowers easier and more effective. It also accelerates issue identification and, best of all, finding solutions.
Katabat Has Your Solution
You know what you need to do. That’s half the battle, right? Katabat is here to get you the rest of the way. Our digital channel capabilities provide you the tools for your auto loan collections to be more productive and more efficient, all while providing an outstanding customer experience. Did you not think collections and happy customers could go hand-in-hand? Think again.
Katabat’s strategist portal is easily configured, allowing you to design and deliver individualized, flexible paths forward for your customers. Our platform’s integrated workflow and channel communication capabilities allow you to deliver personalized, effective communications that engage customers through the channel of their choice.
Learn more about how you can improve early-stage auto-loan collections before they reach the repossession stage. Contact me by e-mail or call/text me at 302-650-3806 to discuss our solutions. I look forward to hearing from you!
Andrea Kochendorfer is Regional Sales Manager for Katabat. She has more than 10 years of experience in financial services in sales, small-business lending, collections, credit, and relationship management. In addition to Katabat, she has worked for Bank of America/MBNA.
Katabat is the leading provider of debt collections software to banks, agencies, and alternative lenders. Founded in 2006 and led by a diverse team of lending executives and leading software engineers, Katabat pioneered digital collections and has led the industry ever since. It is our mission to provide the best credit collections software in the market and solve debt resolution from the perspectives of both lenders and borrowers.
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