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Deeper Loans Call For Better Security Practices

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Deeper Loans Call For Better Security Practices

Industry Trends & Outlook

Subprime auto loans are at a record high and continue to climb. As investors have started investing again and credit has freed up, so have credit standards. Lenders and dealers are going ever-deeper with subprime loans. And that means more credit-challenged customers who might not otherwise be able to afford vehicles are getting into cars that allow them to get to work. That’s good news, right?

The downside is that it also means that the risks of delinquencies are on the rise. Currently, subprime auto loans account for $336 billion in car loans — that’s 38.7% of all loans. As lenders adopt riskier practices to go deeper with loans, they’re loosening standards on loan applications, extending loan terms to as long as 96 months, and increasing loan amounts. This contributes to the rise in delinquencies — at the same time costing lending and dealerships substantial money in repossessing vehicles. In fact, car repossession rates for Q2 2014 were 70% higher than the Q2 2013 rates.

If this all sounds vaguely familiar, it may be because the subprime auto lending boom harkens back to the subprime mortgage bubble that burst in a very big and messy way not too long ago. Dealers who don’t recognize this repeat trend, and who don’t prepare for it, are setting themselves up for substantial losses if and when the subprime auto lending crises hits.

Enter the Internet of Things (IoT) and machine-to-machine (M2) solutions like GPS vehicle tracking systems and payment devices. IoT refers to the interconnection of smart devices, which share data across the Internet. For example, GPS tracking devices installed in vehicles capture and transmit a wealth of data to smart phones, tablets, laptops and desktop computers used by dealers to track and protect their vehicle assets.

The use of IoT and M2M solutions like GPS asset tracking systems is a powerful, effective and attractive way to reduce the risk that comes with deep subprime auto lending. The best of these systems not only allows dealers to locate vehicles, but to automate and improve STIPs verifications, predict and address delinquent behavior, keep customers on track with their payments, and drastically reduce the time and costs associated with repossession.

Privacy & Compliance

That all sounds well and good. However, just as it’s important to make sure you’re performing your due diligence when qualifying customers for subprime loans, it’s equally important to make sure your GPS vehicle tracking system complies with federal and state regulations.

The growing prevalence of IoT among businesses looking to capture and leverage data about their customers, as well as automate business tasks, has gotten the attention of federal and consumer-protection agencies. The FTC recently released a report on IoT, recommending several steps businesses can take to protect their customers’ privacy and security. Among their recommendations are building security into devices from the get-go, deploying multiple layers of security controls, preventing devices and data from falling into the wrong hands, and closely monitoring devices at all times.

So the question you should be asking yourself as a dealer is: Does my GPS vehicle tracking system and payment device do all these things? Make sure the asset management system and solution provider you choose is taking all the right steps to protect and secure your devices and consumer data.

A Simple Solution for Compliance

The GoldStar CMS GPS vehicle tracking system does exactly that. At Spireon Automotive Solutions Group, we’re way ahead of the consumer data protection curve. Our GoldStar CMS GPS vehicle tracking system acts as your trusted partner in protecting consumer data. That’s because GoldStar CMS is built on our award-winning NSpire platform — an ultra-secure cloud-based environment that incorporates a multi-layered security approach just like the one the FTC recommends.

The NSpire network is comprised of multiple Tier 3 and Tier 4 data centers strategically located nationwide. Adhering to stringent security controls and protocols, these data centers are only accessible to people with high-level security clearance, and employ a host of leading-edge physical security features.

The data centers we use also enforce state-of-the-art security measures to protect consumer data that travels across the network. Secure internet pipeline links the data centers, encrypting your customers’ data as it’s pushed through them. Our data centers also employ robust firewalls and sophisticated access protection to ensure your customers’ data doesn’t fall into the wrong hands.

These top-tier data centers have dedicated security experts who use the latest tools for combatting security threats. What’s more, they’re monitoring your customers’ personal data 24/7, year-round — not splitting their security duties with other IT tasks. And they regularly update their security procedures to counter the most recent attack strategies and trends. On top of all that, our own IT team runs weekly security scans against all external-facing systems to proactively catch any potential vulnerabilities before your customer data is put at risk.

At Spireon Automotive Solutions Group, we’re not just engineering robust security features into our technology. Consumer protection and privacy is ingrained in our culture. We’re actively educating the automotive finance industry about best practices in consumer privacy and compliance through white papers, speaking engagements, articles, blogs and more. We’re also active members of NABD, Leedom, NIADA, PATA, NAL and other leading industry organizations, and are working with them to equip automotive lenders and dealers with compliance tools. And we’ve partnered with leading law firm Hudson Cook to develop policies, procedures and disclosure forms lenders and dealers can use to help protect their own organizations. Currently, we’re in the process of completing SOX (Sarbanes-Oxley Act) compliance to ensure our solutions support full disclosure.

Bottom line: You’re in the business of putting people into cars when no one else will. IoT and the right GPS vehicle tracking system will help you mitigate the risk of going deeper with your loans. But you must make sure you’re doing the proper diligence on the front end. And you’re wise to make sure the GPS vehicle tracking system and solution provider you work with is helping you comply with regulations around customer data privacy. Not only to protect your customers, but also your bottom line.

To learn more about our commitment to consumer privacy and protection and our GoldStar CMS vehicle tracking solution, call 1-866-655-8825.

David Meyer
Executive Vice President, Sales & Services Automotive Solutions
Spireon, Inc.

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