It’s no surprise that everyday a car loan borrower is not paying, the lender or BHPH dealer is losing money. With the loss of payment and added cost of collections labor, lenders or BHPH dealers are always spending more money to recover the debt owed.
One of the worst parts of non-payment is the accrual of bad debt, which is the deficiency balance from a sale of a car that a borrower can no longer afford. The chances of a borrower paying the leftover balance for a car they no longer own is highly unlikely.
And with the rise in auto delinquencies, the need to reduce costs, control risk and eliminate bad debt is more important than ever. BHPH dealers and lenders should at least consider incorporating GPS tracking as a smart business strategy that cuts costs and mitigates risk. In fact, 84% of our customers who use GPS tracking in their auto lending business report reduced delinquencies.
Here are the two main ways that GPS tracking helps BHPH dealers and lenders.
While you can’t control external forces at hand, you can always shape the battlefield first by mitigating as much risk as possible when it comes to vehicle depreciation and loss. Using GPS vehicle tracking technology as a collateral management solution (CMS) and vehicle recovery tool is really one of the most effective and simple ways to do so today.
GPS technology enabled on your asset is literally the lock on the door – it will allow you to mitigate risk and control the value of your assets as much as you possibly can. It saves lenders and dealers money in the long run (collections and guaranteed vehicle recovery if necessary) and reduces the amount of bad debt on the books.
Eliminating the Costs associated with Vehicle Non-Payment
Recovering the vehicle asset is the last thing that any auto finance professional wants to do, but it is necessary on occasion.
Time is of the essence when it comes to vehicle recovery, and having a GPS device embedded within a vehicle enables you to locate a car within seconds, not hours or days. The quicker you can recover the depreciating vehicle means less money spent on collection labor, reconditioning and auctioning, and the higher the value of the vehicle assets.
Repossessing an asset sooner rather than later will produce an asset with the most amount of value and reduce the deficiency owed by the borrower, with a much smaller delinquent balance that a lender is more likely to recover. Having to recover less money reduces the amount of bad debt, and less bad debt is what most lender businesses need.
To learn more about how you can mitigate risk and control costs with GPS tracking, visit our Goldstar GPS page or call us at 1.800.557.1449 for a free demo.