Every auto lender looks for ways to improve the efficiency of their lease or loan servicing processes and reduce operating costs. For most auto lenders, those improvements require investments in new or upgraded lending systems or hiring additional staff as lease and loan volumes increase. But a growing number of auto lenders are evaluating alternative strategies to improve services without making significant capital expenditures. For these auto lenders, managed servicing (business process outsourcing for lease or loan servicing) offers advantages, both operational and financial. Below, we look at three key managed servicing outsourcing advantages to explain why many auto lenders have decided that outsourcing is the quickest way to achieve their business goals.
#1: Cost Savings May Be the Most Compelling Outsourced Managed Servicing Advantage
When you make the move to lease or loan servicing outsourcing, you’re likely to see a reduction in capital and operational costs. For many auto lenders, cost savings alone is the main reason for making the move. Any investments you may have been considering in new or upgraded software, IT and communications infrastructure, office space, or additional staffing can now be allocated to outsourcing. And when you no longer have to maintain systems and physical space, your system maintenance cost and physical space are eliminated. Fees for finding, hiring, and training employees also go out the door.
And while we can’t guarantee that your cost savings will be a certain percentage of current costs, when you consult with an experienced outsourced lease or loan servicing provider to discuss your requirements, they’ll be able to provide you with an accurate estimate of potential cost savings.
#2: Greater Efficiency From Technology Investments
Few auto lenders can continually invest in the latest technology and methods to improve lending efficiency. Given the breadth of lending activities, from lease and loan originations to servicing to collections to remarketing, it’s difficult for lenders to maintain the most up-to-date systems and technologies to maximize efficiency across all these areas.
Because managed servicing providers deliver these services on a much larger scale than any single auto lender, they can afford to make investments in systems and innovative technologies that enable significantly greater lending efficiency.
- Multi-channel customer communications including voice, e-mail, webchats, text, and print mail
- Customer relationship management (CRM) systems to track all interactions and communications regardless of channel and create a single view of the customer
- Cash management to handle payments via ACH, lockbox, in-house, balance transfers, and promptly update ledgers and accounts to reflect lease or loan status
- Workflows that reflect best practices and use decision rules for consistent, efficient management of account payoffs, defaults, bankruptcies, and repossessions
- Title management processes to validate the vehicle, lienholder, and registered owner as well as automatically follow up with dealers or sellers when titles have not been received
A well-established outsourced managed servicing provider keeps current on the evolving federal and state regulations related to lending. The best ones maintain collection licenses in all 50 states, so you’re assured that these processes are compliant, regardless of where your borrowers reside.
#3: The Ability to Deliver Higher Quality Services
A well-established outsourced managed servicing provider also offers skills and services that go beyond what many auto lenders can efficiently provide in-house. These services provide a higher quality of care that helps avoid servicing problems and assist auto lenders in enhancing their reputation in the community.
- Welcome calls that inform borrowers regarding lease or loan program expectations, answer any questions, and pave the way for a smooth lease or loan servicing experience
- Multilingual associates who can provide guidance and answer questions for borrowers who are not native English speakers
- Return mail processing to validate and correct addresses, safeguard borrowers’ private information by destroying undeliverable mail, locate hard-to-find recipients, and reduce postage and mail production costs
By opting for outsourced managed servicing, you not only reduce expenses and increase efficiency in servicing lease and loans, but you’ll also be able to focus in-house resources on your core competencies of lease and loan origination. If you’re currently considering in-house investments to improve process efficiency and reduce operational costs, now may be the right time to consult with an established outsourced managed servicing provider to explore the advantages.
Getting Started
defi SOLUTIONS provides software solutions and services across all elements of the lending life cycle, including origination, servicing, and outsourced managed servicing. We have been helping auto lenders for over 30 years with proven processes that improve lease and loan servicing efficiency. All of our offerings are tailored to the needs of finance companies, credit unions, captive lenders, national banks, regional banks, and lending start-ups. Contact our team today to learn more about the advantages of outsourced managed servicing.
