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Combat the Rise in Repossession Rates with GPS Vehicle Tracking - Part One
According to recent reports, long term automotive delinquency (60 days or more) and repossession are up this year – 12 and 17 percent respectively. Despite repossession rates dropping for banks and credit unions, finance companies saw their repossession rates increase by 52 percent over the same period last year. While not quite recession level numbers, the rise is nonetheless troubling, especially as the economy continues to recover.
Subprime auto lending can often be a double-edged sword. In search of new business, lenders often relax consumer qualifications. Less restrictive credit standards mean more buyers, more buyers mean more profits, and more profits are ultimately what every company is looking for.
There is, however, a down side to all of this lending and spending. Less restriction and more buyers also mean an increase in repossessions.
Dealers and lenders must walk a fine line between the lure of profits from new customers, and the loss of profits from repossessions. In addition to the terrible burden placed on borrowers, bad-loan charge offs cost lenders an average of $7,401 per vehicle.
What (if anything) can dealers and lenders do?
While delinquencies and repossessions may never be entirely eliminated, they can definitely be contained. GPS vehicle tracking systems are a great place for any business to start.
As the economy continues to trend upward, dealers and lenders should expect an increase in new business to help them recoup some of their lost profits. In fact, auto sales are set to reach levels not seen in years! Additionally, despite the disappointing delinquency and repossession numbers, repo rates for auto loans are still just one half of 1 percent. The vast majority of borrowers continue to pay their bills on time.
Stay tuned for part two of this series where we’ll examine specific GPS vehicle tracking solutions that will help businesses lower repossession rates.