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What exactly is driving risk downward?
According to the report, vehicle financing has played a major role. Yes, analysts say that one of the reasons the aggregate credit risk was down almost double digits in Q4 2013 from Q4 2012 is because more people are making their auto payments on time.
“With auto loan and credit card delinquency levels hovering near all-time lows for the last two years, a decline in go-forward consumer credit risk would be expected. However, it was a pleasant surprise to see the Credit Risk index drop to levels not seen in nearly 10 years,” said Ezra Becker, vice president of research and consulting for TransUnion.
While consumer credit risk is low, it would be wise for dealers to implement a solution that can help reduce their liability even further. With a proper collateral management system (CMS), businesses can discreetly track vehicles 24/7, without the threat of detection or removal. Automotive lenders and dealers can set up automatic alerts to notify drivers when their payment date is approaching, or when they are delinquent. They can even remotely disable a vehicle with a starter-interrupter when payment is not made. The confidence of knowing where and when a delinquent vehicle is being driven eliminates the need to spend any excessive time or money tracking down vehicles.
Even if the credit risk continues to fall for the rest of the year, the protection and savings offered by CMS are worth paying attention to.
To learn more about Spireon’s multiple award-winning automotive collateral management platform, view our product page.