For years, lenders have invested in infrastructure to increase the number of times borrower data is updated for repossessions, but new research suggests this method could be overly burdensome and ineffective, said Cort DeHart, vice president of business development at Agero, during the Subprime Forum.
Lenders could decrease internal costs by $27 per repossession, and save time by reducing redundancies in the system and centralizing data, he said.
Between lenders, repo companies, and middleman forwarding companies that manage updates on repossessions, the industry spends an average of $74 per repo. Including vendor vetting and inspections for the industry’s 1.7 million recovered vehicles, that adds up to $136 million annually in “waste,” he said.
Agero’s analysis found no correlation between the number of times a borrower’s data is updated and number of repossessions. Some repossessors claim they could pick up 5% more cars if they didn’t have to spend so much time on updates, DeHart said.
“If we just picked up 1% more cars annually, that’s about 90,000 cars at $8,000 a pop,” he added. “It’s $720 million in opportunity costs because these guys are spending time doing updates.”