Replies to This Discussion

Permalink Reply by Elise Negrin on November 20, 2008 at 9:14pm

I've seen a larger number of loan approvals ABSOLUTELY requiring GPS tracking devices in the vehicles. It's my decision as the credit analyst and now I wont deliver a car without it.
As for repossessions, I've had a dozen repos in the last 2 weeks and that's for a portfolio of only 200 loans! Yes they are non-prime & sub-prime but the default rate is out of control. The GPS device makes it quick and easy to repossess, but the only cost reduction is not having to pay higher costs to the Recovery company.

Permalink Reply by Mike Gibb on November 21, 2008 at 7:58am

Elise -- the loan approvals are contingent on installing GPS on the vehicles? Is that a new development?

Permalink Reply by Elise Negrin on November 21, 2008 at 11:00pm

Michael, I've been analyzing/approving sub prime non-recourse/full recourse/creative financing for about 23 years. About 6 years ago we started experimenting with them and now i find that yes, the answer to your question is yes, a LOT of the approvals are contingent on installing a GPS. I wont release payment until the unit is checked and working. For sales finance companies as small as the ones I have been involved in, quick recovery is critical and the GPS does the job.
There are a lot of small companies around that dont have much respect for the "FICO" or any credit scoring systems. I guess I am one of those, but that's another subject.

Michael Gibb said:

Elise -- the loan approvals are contingent on installing GPS on the vehicles? Is that a new development?

Permalink Reply by David Leonard on April 20, 2009 at 10:40am

Terry -

I have spoken to several major captives about this exact topic. You would think that this technology would help reduce our overall cost associated with the recovery process. However, the industry feels that the benefit is the "increasse" in recoveries, and not the cost associated with... When we did an analysis on the "increase" in recoveries, we saw a .091% (yes less than 10th of a %) in the overall increase in recoveries. So, I thought, maybe it reduced the overall number of skip accounts. This has not been the case. The problem with the techonolgy is it goes off license plates. The borrowers are switching the plates, getting paper tags, etc. As the internet blogging, twitter, etc. grows; so does our borrowers knowledge base.

Overall, I think the technolgy helps to a small extent, however, the cost of the product combined with the cost of the recovery does not benefit for the ROI.

Permalink Reply by Jeremy Scott King on April 29, 2009 at 6:22pm

Terry, what is their reasoning behind using license plates?

Permalink Reply by Daniel Castleberry on August 13, 2009 at 6:15pm

Yes being a repossession compnay we have noticed that the lenders that have GPS are 200.00 per unit. While being cheaper for the Lender it is not always good for us.

Permalink Reply by Ashley D Herndon on September 1, 2009 at 3:26pm

Yes we have seen imporvement in costs, related to frequency and net chrge off. But it all depends on the system used. If it is locaate only, that is proving to be viable when a lien holder lets an account get out of hand and needs to be repossessed and is a potential skip, or to check location prior to paying for someone going out. However, since so many of the repo comapnies charge by the completed action not the number of trips, if location is used, it should be acscompanied by an advanced form fo reminding and consequence.

Just my opinion, but that is what the numbers show us so in the last 10 years.

Ashley D Herndon