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.