Best Practices for Auto finance collections

Trends in auto finance

Despite record auto sales in the last couple of years, auto sales are expected to drop from 17.3 million in 2018 to 15 million by 2020. With higher prices than ever before, interest rates are also at an all time high, and a change in the regulatory landscape, it is likely we will see an increased oversight on automotive finance regulation.

The financing environment that had helped buoy U.S. car sales is receding. With its less favorable credit conditions, 2019 will usher in higher auto demand and auto share price performance throughout the value chain. This will add to the astronomically high 7 million Americans with auto loans that were 90 or more days delinquent at the end of 2018.

Managing auto finance collections

Managing high delinquencies is proving to be a challenge for auto finance collections. Collections is a complex process which is plagued with manual, inefficient tasks with little to no insight into data. Today’s customers don’t respond to random calls.

An improved, data-driven contact and treatment strategy must be implemented. Auto finance collections can leverage technologies such as AI to drive collections and gain a competitive edge. Technology can enable powerful insights but managing team skills, resources, and information management is equally important for auto lenders. This blog talks about the best practices for auto finance collections team to boost their productivity, manage customer experience, mitigate risk, and drive more amount for collections.

Established processes supported by technology

Having a formal structure can help auto finance collections address pitfalls better. This structure can guide the various parts and stages of the collection journey. Starting with clients signing up for your service, their data is the most important tool in your arsenal. Verify self reported client data by checking against multiple sources such as government issued IDs and contacting references provided.

As clients sign up, explaining terms and conditions including the responsibilities and expectations of all parties involved and getting an acknowledgement will go a long way in navigating legal issues. This includes having a strict credit policy in place, checking their credit history, and making a record prior to extending/offering credit. Once the service has been rendered, collections team can realize warning signs of delinquency. AI-driven platforms can provide recommendations on both early and late delinquencies. This can help reduce workload for the collections teams while also mitigating the risk of non-payment.

Automate notifications for the complete collections journey and send out through the preferred communication channel. Platforms with features such as 2i™ Collections Journey can help you manage this better. It’s imperative that collections team makes contact at the right time to drive improved collections.

Train collections personnel

The collections industry is shifting to a customer centric perspective. Call quality needs to be monitored. Collections customer journey has to be managed end-to-end. To preserve customer relationships, it’s important that personnel must be trained to help out the customer in the best way possible while also driving collections.

With laws in place against harassment, it is imperative to maintain compliance while keeping abreast of latest developments in federal and state laws. The best way for this is to ensure all personnel are licensed and can navigate the intricacies of the legislation and the industry. Further, personnel must be trained in understanding clients, maintaining tact and sensitivity, and knowing how/when to demand payment.

Addressing Key Challenges before the Collections Industry Today

Be proactive

With data augmenting the collections process, personnel need to be more proactive. As AI and ML become the next big thing, it is important to stay ahead by leveraging data from traditional and digital channels. Dasceq’s AI-driven 2i™ platform does this, giving an integrated view of the client, helping agents keep track of collections.

Dasceq segments the population using various metrics. This helps focus on priority accounts and assigning specific teams for different accounts based on history, payment trends, length of delinquency, and amount due. With personnel being trained in client engagement, they must update and manage accounts regularly, maintaining a record of each conversation that can serve as a reminder of promises made in subsequent conversations.