Auto loans create exciting lending opportunities for credit unions and their members. Some people looking to lease a vehicle decide to become credit union members because they believe they can get fair interest rates, low loan minimums, and high-quality customer service. Credit unions often have to put in a great deal of legwork to meet their members’ expectations. Managing an extensive loan portfolio requires a thorough understanding of payment processing, communications, collections, repossessions, title management, and many other time-consuming tasks.
An auto loan servicing expert can streamline the process. When you hire a third-party loan servicing provider to go through each of these steps with you, your credit union will enjoy many benefits, including better portfolio performance. If you want to manage assets more effectively, consider hiring an auto loan servicing expert.
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What Can the Experts Do for You?
Auto loan servicing companies provide a wide range of services to credit unions. The exact services vary, but they can generally provide:
- Payment processing: It’s crucial to make the payment process as simple and convenient as possible for members. An auto loan servicing provider manages payment portals and tracks repayments throughout the loan period. The best companies also ensure that this process is streamlined and easy for your members to navigate. They provide tools to make the borrower happy, which encourages them to apply again for a loan in the future.
- Member communications: If a member has questions or you need to get in touch with them, the auto loan servicing provider can handle it. If a member misses a payment, the provider could immediately contact them via an automated call center or a company representative, depending on which communication services the provider offers and what the situation requires. They are also there to answer specific questions your members may have about their loan terms or repayment schedules.
- Delinquencies or nonpayments: The auto loan servicing provider can intervene quickly when an account becomes delinquent. They can also discuss options with the member to help them bring their account back into good standing and resolve the delinquency.
- Collections or repossessions: In the event that a member falls behind on payments and a resolution cannot be reached, the auto loan servicing provider can then start the collections or repossession process. Some companies manage their own collections departments. Full-service companies can also help your credit union repossess the vehicle.
- Title management at the end of the lease: The auto loan servicing provider’s services end when the vehicle’s lease term ends. However, just before this happens, the provider can help you change the title on the vehicle, make sure all of the documents are in order, and check that the final repayment was processed correctly.
- End-to-end loan servicing: This is a combination of all of the services in the list above. The auto loan servicing provider assists with every aspect of the process from the moment the lease is signed until the loan period ends. This enables credit unions to focus on other aspects of the business and ensure that their members are as happy as possible with their services.
While you could tackle all of these steps yourself, it may not be the best use of your time. The less time and resources you spend on these areas of the loan management process, the more funds you’ll have to expand your existing portfolio.
The Benefits of Auto Loan Servicing for Credit Unions
Outsourcing auto loan servicing to a third party can save you time and money—a significant benefit for credit unions that want to run a lean business. However, one of the greatest benefits of third-party auto loan servicing is its effect on your credit union’s auto loan portfolio.
When you hire a third party to manage the entire lending process from start to finish, you can grow your portfolio much faster. There are a few reasons why outsourced loan servicing can improve your portfolio:
- You’ll have fewer tasks to manage: Auto loan servicing requires daily attention—sometimes even 24/7 service. Outsourcing the many tasks involved in the loan management process saves you time and money.
- Your loans may be managed more efficiently: Auto loan servicing companies are dedicated to managing every step of the process as efficiently as possible. Some of these companies have highly effective loan management tools and experts on staff who have a great deal of experience with auto lending. You could see an improvement in payment processing times, which is something your members will likely appreciate. You may notice a reduction in delinquency rates as a result of early intervention, more effective communications, and more reliable loan risk management. All of these benefits could lead to better returns on investment for your credit union.
- You’ll have more funds: Having more active loans and accounts in good standing means you’ll have more money to dedicate to expanding your portfolio.
- You can focus on customer service: Your members will also appreciate the extra care and attention they receive from your staff. Outsourcing your auto loan servicing process means your staff can focus entirely on members and address their needs. With this extra attention, members may be less likely to miss payments or more likely to lease a vehicle from you again after their leases have ended.
These are just a few of the benefits of outsourced auto loan servicing for credit unions. You may find many other more nuanced benefits when you hire a provider to take care of this process for you.
Which Loan Servicing Experts Should You Hire?
The success of an auto loan servicing contract rests on expert banking and lending knowledge. The provider you hire should have experience managing credit union portfolios and be able to competently address your members’ needs. This is why you should seek out companies that provide a full range of services for credit unions, not just one or two steps of the process.
Partnering with an end-to-end auto loan servicing provider means that you won’t have to pay multiple companies or hire more staff to manage your portfolio. Everything remains under one roof, which makes it easy to process payments, communicate with members, resolve delinquencies, and manage titles more effectively. With an experienced and knowledgeable lending expert guiding you through this process, you can focus on new opportunities—including expanding and improving your portfolio.
defi SOLUTIONS provides expert auto loan servicing to credit unions. Our goal is to grow your loan and lease portfolio as quickly as possible by streamlining the entire loan management process from start to finish. To start, contact our team today or register for a demo.
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