Over the past several years, there has been a very clear trend by lenders towards the utilization of repossession management firms (forwarders) to manage the rising complexity of repossession related activities. Today, the vast majority of the top 100 auto lenders in the country rely primarily on this model. However, the proliferation of the model has been much lower with smaller institutions (banks, credit unions, local finance companies, etc..)
While working directly with the agent assigned can, in some cases, speed up communication, a national repossession management company can offer significant benefits. However, it does not have to be an “either or” proposition. A small lender can deploy both strategies successfully. The remainder of this article will shed more light on the benefits of a national firm and how one can be used to compliment (not replace) current direct agent relationships.
One of the main benefits offered by a national firm is the size of its agent network. In many cases, you may not be sure where your asset is located. Available data may point to a number of locales/states where the debtor may be living or working. By employing a national firm, you get access to a network of hundreds of contracted and insured repossession agents that can check potential home addresses, places of employment, etc. in multiple spread out locations.
National firms usually have highly experienced skip tracers and can also afford to subscribe to expensive data source that provide very valuable information. Unless you know exactly where the collateral is located, this can be a big advantage.
LPR technology has revolutionized the repossession industry. Repossession efforts have historically focused on where a person lives and works. LPR covers virtually everywhere else.
While a small lender may be getting some benefit from the technology by utilizing direct agents that run cameras, the benefit is limited to the historical scans (sightings) that the agent may have on file. However, a national management firm offers a far more powerful version of the technology. National firms put your assignments into a national system that is connected to almost 4000 camera equipped repossession trucks or spotter vehicles. This network scans over 160 million license plates every month! Scans are instantaneously compared to the database of vehicles out for repossession and provides an alarm literally when the repo truck is right behind the vehicle. Having your assignments in the system effectively gives you a network of thousands of repo agents out looking for your vehicle no matter where it might be. Not only does a national repossession firm give you access to it, but firms like ours operate 24/7/365 call centers to authorize the pick up as vehicles are sighted and many of these sightings take place overnight and on weekends.
The bottom line, having your assignment in the live LPR system will result in 3X the number of LPR assisted recoveries than simply relying on your agent’s use of historical data.
Simplified Pricing and Billing
In addition, national providers have a flat fee which includes professional skip tracing, LPR placement, multiple data source research tools, and field agent costs for repo. National firms are also in a better position to advance the funds often necessary to get equipment out of repair shops or impound yards. Fronting large sums is very difficult for the typical small repo agency.
Greater Legal Liability Protection
One of the most important benefits of a national firm is the additional layer of legal protection. National firms take contractual responsibility for the actions/mistakes of their agents. Additionally, they typically also offer larger and more comprehensive insurance policies. As we all know, many things can go wrong in a repossession. With a large national firm standing behind the work, you know that the matter will be dealt with appropriately. That is not always the case with a small “mom and pop” repossession agency.
Having the Best of Both Worlds
The best news here is that if you are committed to maintaining a direct agent relationship for your primary repossession efforts you can still get the benefits brought by a national firm. The industry data is pretty clear, if your agent has not recovered a vehicle within the first 21 days of an assignment, the recovery rate after that point falls to the 6%-8% range. Keeping the assignment with that agency at that point really does not benefit anyone. Rotating the case to a national firm should yield a recovery rate in the 20% – 35% range depending on whether it is assigned as a straight repossession assignment or a skip case. Most agents will also tell you they would prefer the assignment be withdrawn after a reasonable period as they really can’t afford to devote further resources to it.
For more information on how your institution can benefit from such a strategy, please contact Chris Vogelsong at email@example.com or 704-777-9923.
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