Borrowers need to know the importance of on-time payments, and what it can do for them, so that lenders won’t have to deal with overdue or defaulting accounts (no one likes that, right?).
This is especially true in deep subprime space, where consumers struggle to improve their credit scores.
We asked Prestige Financial Services to share a few tips.
First, helping your customers improve their credit scores can be as easy as printing out an informational brochure.
“We have taken the approach of giving the opportunity for people to learn how to establish and build credit, especially for someone who has been through some sort of a credit crisis, and how to get back on their feet,” Rich Hyde, chief operating officer at Prestige Financial Services, told Auto Finance News. “Our collections process, in particular, is counseling-style. We spend a lot of time teaching our employees, so they can educate our customers.”
As part of the transition to direct-to-consumer space, the lender is launching a new website — geared towards direct customers — which will have educational videos and articles. “With direct lending now, our goal is to provide them [customers] not only an auto loan, but some ideas on other things they can do to move up from the arena of the lower rates [credit scores],” Hyde said.
The education aspect, however, should come from the onset of the loan, he said. “We would explain the basic elements of a loan, and go over the credit score, and how it can be affected by timely payments,” Hyde explained. “We assign one account manager when the loan is originated, and that account manager stays the same throughout the life of the loan. That way, when there are bumps on the road, we have someone who understands that customer’s situation, and knows the history.”
Prestige also runs a rate reduction program, which allows customers the opportunity for an interest rate reduction, with timely payments. “Rate Reduction [participants] are our best consumers, and on average they can earn 80 to 100 basis points — or in that ballpark,” Hyde said. “That way they can improve their credit score and move on to a bank or a credit union.”
