How collection software can help bridge the gap in the Auto finance past-due customer experience

Consumers deserve a seamless customer experience, even when they become past-due on their auto loan payments. Failing to do so can harm the longevity of auto lenders’ relationships with customers and have severe implications for brand loyalty.

Let’s be honest; customers don’t intentionally try to be late on payments. Life often gets in the way, making it difficult to remember that a payment is due or even afford it. External factors such as inflation and the economic recession can impact their ability to keep track of bills.

Such a reality poses a good challenge for auto lenders with growing amounts of past-due customers and insufficient resources. On the one hand, they are expected to look out for their customers’ best interests without compromising cash flow while, on the other hand, they’re trying to scale within budget. This is where collections software can be critically important for auto financing companies, especially to handle delinquent accounts that are less than 90-days old.

Lexop, a software that helps companies optimize the repayment journey for past-due customers, found in a 2022 survey that 69% of US consumers prefer digital dunning methods such as email or text messages. However, 73% affirmed receiving non-digital methods such as letters and phone calls. This trend indicates a disconnect between consumer expectations and reality.

A positive or negative customer experience can make or break a brand. Unfortunately, the survey also showed that most consumers who described having an overall negative experience as a past-due customer attributed it to poor service received from unsympathetic and rude agents (32%) and the lack of payment options available (23%). Understandably, 71% of unsatisfied past-due customers will consider switching to a competing service provider.

Auto lenders should ponder how their approach and collections activities fit their overarching strategic objections, such as customer retention. Using collections software can help auto lenders transform their recovery process to be more efficient while humanizing their efforts and encouraging customers to view the brand as a partner during early-stage collections. This sort of digital solution doesn’t need to be overly complicated. In fact, it can be deployed in two easy steps:

Step 1: Send friendly and personalized digital reminders. Contact any volume of late-paying customers with personalized notifications via email or SMS. Pinpoint the best time and channel to reach different customers based on their responsiveness.

Step 2: Provide an online payment portal with flexible payment options. The digital nudges include a clickable payment link that directs customers to a self-service payment portal to settle their past-due account online conveniently. There, customers are presented with different payment options that include the ability to make a minimum payment, pay in full, or create a flexible payment arrangement.

What auto lenders do now to run collections define their course for the future. Where they focus their efforts, what they decide to optimize, and how they adapt to the ever-changing expectations of consumers will determine their growth trajectory in the years ahead.

Check out the latest US consumer trends in early-stage collections and learn how to optimize your recovery process accordingly. Download Lexop’s ebook: Early-stage collection trends in 2022.