When Delinquencies Rise, Recovery Execution Matters More

The auto finance industry continues to face a challenging reality: more borrowers are falling behind.

Delinquency rates have climbed significantly in recent years, with particular pressure in the non-prime and subprime segments. Higher vehicle prices, larger monthly payments, elevated interest rates and longer loan terms have all contributed to an environment where more consumers are struggling to keep their accounts current.

For lenders, the immediate concern is obvious. But rising delinquencies also create a second challenge that receives less attention: the ability to locate and communicate with borrowers once an account becomes difficult to resolve.

Delinquency Is Only the Beginning

Once an account becomes delinquent, every day matters.

Phone numbers change. Addresses become outdated. Consumers relocate. Employment information becomes stale. Traditional contact attempts stop producing results. And as accounts progress deeper into delinquency, the information contained in the original loan file may become increasingly unreliable.

That makes accurate information one of the most valuable assets in the recovery process.

Effective skip tracing is no longer simply about finding more information. It is about identifying the right information and determining which data is current, actionable and most likely to lead to successful borrower contact.

In a rising-delinquency environment, that distinction becomes increasingly important.

Better Data Creates More Recovery Options

The earlier a lender can establish right-party contact, the more options may still be available.

A successful contact can lead to a payment arrangement, updated borrower information, a voluntary surrender or another resolution that avoids unnecessary time and expense.

When contact cannot be established, accounts can become progressively more difficult and costly to resolve.

That is why sophisticated skip tracing should be viewed as part of the recovery strategy rather than simply another step in the collections process.

Accurate borrower location and contact intelligence can help lenders prioritize accounts, improve right-party contact rates and give recovery teams better information before additional resources are deployed.

It can also improve what happens downstream. When repossession becomes necessary, better intelligence regarding a borrower or asset can help reduce wasted assignments, unsuccessful field visits and time spent pursuing outdated information.

Rising Delinquencies Put Recovery Performance in the Spotlight

Lenders cannot control every factor contributing to consumer delinquency.

They can, however, control how effectively they respond once an account becomes delinquent.

As portfolios experience greater pressure, relatively small differences in contact, resolution and recovery performance can become significant when multiplied across thousands of accounts.

The lenders that perform best in this environment will not necessarily be those that avoid delinquency altogether. No lender can.

The advantage will increasingly belong to organizations that are able to identify problems quickly, locate borrowers accurately and maximize recoveries once accounts become delinquent.

That requires good technology and good data, but it also requires experienced people who know how to interpret that information and turn it into action.

Turning Information Into Results

At Express Capital Services, this is the environment our teams work in every day.

ECS provides investigative skip tracing, collections and recovery solutions for auto finance companies nationwide, with particular experience in the non-prime market. Our focus is not simply on generating additional data. It is on developing accurate, actionable intelligence that helps lenders establish contact, locate borrowers and assets, and move difficult accounts toward resolution.

As delinquency pressure continues across the industry, the quality of recovery execution will matter more than ever.

Because finding information is easy. Finding the information that leads to a recovery is what matters.