Payment Devices and the BHPH Consumer

Results from Recent NABD/PassTime USA Survey

The pri­ma­ry pur­pose of pay­ment assur­ance devices is to more effi­cient­ly man­age and reduce col­lec­tion risk by increas­ing the like­li­hood vehi­cle pur­chasers will make time­ly pay­ments. In turn, financers who uti­lize these devices can elec­tron­i­cal­ly mit­i­gate the inher­ent risk asso­ci­at­ed with financ­ing sub­prime con­sumers with low­er cred­it scores.

Although the use of devices does not guar­an­tee cus­tomer repay­ment, the major­i­ty of respon­dents to this sur­vey report­ed that devices (both dis­ablers and GPS) pro­mote cus­tomer repay­ments and increase the effi­cien­cy of recov­er­ies when cus­tomers do not pay. The abil­i­ty of the financer to reduce risk ben­e­fits con­sumers in sev­er­al ways.

Since the advent of pay­ment assur­ance devices in the “Buy Here Pay Here” (BHPH) mar­ket­place, many of the sur­vey respon­dents who have used them expe­ri­enced reduc­tions in con­sumer defaults and repos­ses­sion rates.

(NABD) com­plet­ed an on-line sur­vey of oper­a­tors (includ­ing both deal­ers and finance com­pa­nies) which focused on the ben­e­fits to con­sumers from the prop­er use of pay­ment assur­ance devices.

The NABD sur­vey includ­ed the fol­low­ing ques­tion:

Do you believe that the use of devices low­ers your over­all risk of cus­tomer default?

  • Yes = 130                    81%
  •  No = 31                       19%
  •  Total = 161                100%

The sur­vey demon­strat­ed that pay­ment assur­ance devices can reduce default risk and mit­i­gate loss­es from repos­ses­sions. Based upon the sur­vey results, devices (both dis­abler and GPS) encour­age con­sumer repay­ments, reduce col­lec­tion costs and improve effi­cien­cies in recov­er­ies when cus­tomers don’t pay.

With risk reduced, financiers are able to be more flex­i­ble with their cred­it approval cri­te­ria and
more like­ly to finance larg­er con­tracts on bet­ter vehi­cles with low­er down pay­ments.

The “Pay­ment Devices & the BHPH Con­sumer Study” sur­vey con­firmed that these devices, when prop­er­ly used and ful­ly dis­closed, ben­e­fit both financers and con­sumers. The repay­ment reminder fea­ture encour­ages more time­ly repay­ment and allows con­sumers to estab­lish more pos­i­tive cred­it his­to­ry.

Click here to see the com­plete sur­vey results. Then click here for the BHPH Nation­al Con­fer­ence 2012 Sur­vey Results of Best Prac­tices. And for more infor­ma­tion con­tact Corinne Kirk­endall at PassTimeUSA.

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