Collecting Creatively

For as long as there are auto loans, there will be people who don’t make payments. It’s as certain to me as death and — that other thing.

This dynamic forces lenders to continually look for ways to ensure that as many of their customers pay as possible. The past decade has seen lenders look to in-vehicle hardware and software — such as GPS devices or starter-interrupt devices — to help them identify and locate delinquent debtors and defaulted collateral. 

I was watching a television show the other day and there was a scene where a baby was locked in a car with the keys inside. One of the owners called a fictional version of OnStar or Sync, the on-board computer systems offered by General Motors and Ford, and just before the owner’s partner smashed a window with a garbage can to get to their child, an operator wirelessly unlocked the car doors and saved the day. 

I’ve also seen a commercial where a Ford owner uses his Sync to check Facebook to see how a date went. 

This got me thinking. 

Are GM and Ford using OnStar and Sync to collect on past-due loans? If not, why? The manufacturers are able to tell when these cars are being driven. Why not relay that information to a collector and have the collector try to connect with the debtor? Why not threaten to turn off the car remotely — or maybe lock the doors — until a payment has been made? OnStar and Sync (and whatever other similar systems are currently available) offer tremendous access to car owners. That access creates a huge opportunity. One of the hardest problems faced by lenders is making contact with past-due borrowers. People ignore phone calls if they don’t recognize the name and number on the caller ID (or in some cases, they ignore the calls even when they recognize the name and number). People throw away collection letters without even opening them. 

By reaching a car owner while they are driving the vehicle, the lender has a captive audience. There’s nowhere for the driver to go. There are even revenue-generating opportunities if GM and Ford were to offer access to their customers to other creditors. Capital One, for example, could use the system to collect on auto loans and credit cards. 

There have been great strides in technology and collections. But many of those strides still rely on debtors agreeing to participate in a conversation with their lenders. The proliferation of on-board computer systems and concierge services could tip the scales in favor of the lenders for the first time in a long time.