Posted by Alison Arthur on 19 Jul 2018
Rideshare apps, booming urban populations, and investments in public transportation have all helped lessen people’s dependence on owning personal automobiles. Despite these forces, car ownership is back on the rise after the setbacks it experienced during the Great Recession of 2008. As car ownership continues its rebound, so do the auto finance loans used to make these purchases.
In 2017, outstanding car loans hit a record high of $1.1 trillion, with an estimated 107 million Americans carrying debt related to their automobiles. Among banks, credit unions, captive auto finance companies, and finance companies, credit unions experienced the highest growth of total open automotive loan balances in 2017, increasing approximately 13% over the previous year.
With the upswing in car ownership and auto loans also comes a surge in payment delinquency. Late payments and loan defaults can lead to costly auto repossessions that disrupt auto lenders and car owners alike. The delinquency rate on auto loans has been rising steadily since 2011. And in 2017, it was estimated that 6.3 million Americans were delinquent on their car loans.
The ripple effect of auto loan delinquencies
On-time auto loan payments are crucial not only for an individual’s financial well-being but also for the economy as a whole. Having dependable access to personal transportation means that citizens can get to-and-from work, shop at local businesses, and take road trips with friends and family. For people that rely on personal automobiles for these activities, being late or delinquent on car loan payments can have disruptive effects on their lives and financial health.
Making auto loan payments simple
For many people, on-time car payments are as crucial to their overall well-being as paying their mortgage, utility, and grocery bills. And as such, people are looking for simple, safe payment solutions that can help ensure they never miss a payment. The right electronic bill presentment and payment (EBPP) solution can provide flexible, customizable options for your auto finance customers. Here are some key features and functionality to look for in an EBPP solution for auto finance payments.
1. Offer auto loan customers the most ways to pay – whether in person, online, over the phone or through chatbot technology.
Servicing auto loans means servicing a diverse group of customers. Auto finance companies are tasked with accepting payments through a variety of different channels to support the individual needs of their customers.
For example, some customers might want to make walk-in payments at physical locations. This can be especially helpful for customers who don’t have traditional banking relationships or access to checking accounts. Others might like the convenience of calling an IVR system, so they can make payments right up until their due date.
Increasingly, customers are looking for digital channels to make their payments. This might mean logging in to a client portal on a desktop computer or making a one-time payment via a mobile device. Some EBPP solutions can even facilitate payments by leveraging artificial intelligence (AI) and chatbot technology in messaging apps like Facebook Messenger and smart home speakers like Amazon Alexa. Make sure to adopt an EBPP solution that can serve the needs of today and adapt easily to the payment trends of the future.
2. Let your customers know when their auto loan payment is due. And allow them to sign up for reminders so they don’t forget.
Just as customers have different preferences for how they choose to pay, they also have different preferences for how they want to be alerted that a payment is due. Some might like receiving a physical bill in the mail while others might prefer the convenience of an eco-friendly e-bill. Make sure your EBPP solution can empower customers to choose the billing method of their choice.
Of course, sending bills either in the mail or electronically doesn’t mean that customers are going to pay right away. This is where providing the option of signing up for billing reminders can create extra peace of mind. Email or text notifications can be an effective way to prompt your customers to take action and avoid the penalties associated with late payments.
3. Provide billing options like AutoPay that streamline payments for your auto loan customers.
Car loan payments are simply too important to miss. Be sure to provide an EBPP solution that gives your auto finance customers the ability to make automatic payments. This allows them the freedom of knowing that they won’t miss a payment and suffer the consequences of a delinquent account. Recurring payments can also be a valuable option for customers that want to align their car payments with their paycheck cycles.
4. Give customers the flexibility to skip an auto loan payment if they need to.
Providing a skip-a-payment option might be a unique selling point for your auto loans. For a fee, customers can have the option to skip-a-payment and make it later, which can come in handy during times of unexpected financial hardship.
The Bottom Line: Access to automobiles is critical not only for individuals but also for the economy at large. Providing your auto loan customers with a full service EBPP solution can help streamline the billing process and empower them with the tools they need to never miss a payment.