Consumer complaints against auto lenders on the rise, says recent report the Education Fund of the US Public Interest Research Group (PIRG) and the Frontier Group. Analysis of consumer data for October 2020 revealed a record spike in car rental and finance complaints from March to July 2020, even with many auto lenders offering payment assistance to customers in response to the demand. pandemic.
Many of the problems described in the report stem from outstanding auto loan balances, which have reached an all-time high. $ 1.36 trillion in the third quarter of 2020. And as lender portfolios grow, so does the increased workload on lender call centers, loan repayments, and customer service teams.
Further analysis of the US PIRG report reveals that a significant portion of complaints relate to accidents or total loss. In fact, 13% of the accounts associated with loan repayment complaints mentioned the term “totaled” and 11% mentioned “accident”, with several reports of late fees following an accident.
A total loss can be a very manual and tedious process for consumers and auto lenders. As lenders seek to improve customer loyalty and increase operational efficiency, digitize total loss workflows could help reduce process complexity, free up resources and minimize the likelihood of missed payments.
Consumer behavior following a total loss
When a vehicle is destroyed, whether as a result of an accident, extreme weather conditions, or some other incident, it can take weeks for the auto lender to be notified of the total loss.
Often, the customer does not realize that he must continue to repay his car loan even if he is no longer in possession of the vehicle. While the customer waits for the insurance to process the claim and repay the loan, missed payments can occur resulting in default.
Lenders often only discover the total loss when the customer’s payment goes unpaid. At this point, the customer experience may already be compromised.
If the customer criticizes the lender for this negative experience, they may choose to finance a replacement vehicle through another auto lender.
The sooner the lender receives notification of the total loss and the claim is resolved, the sooner they can engage with the customer to consolidate the payment and discuss a new loan. Reducing the notification period is key to creating a positive experience.
Lender’s availability and total loss
Although the frequency of liability claims for collisions and property damage declined during the pandemic, rapid traffic and higher vehicle speeds contributed to increase in claims for total loss of vehicles.
With the increase in the frequency of total losses, in particular among younger vehicles with outstanding loans, more of the lender’s resources should be devoted to resolving losses fully. But customer service resources are already taxed.
Lender call duration increased by 50% at the start of the pandemic as worried customers looked at outstanding loans and forbearance programs. This increase in call duration meant that lenders had limited resources to devote to total losses, where long phone calls and wait times between lenders and insurance companies are a constant obstacle to resolution.
Prolonged economic uncertainty could have an additional impact on the availability and resources of lenders, making it more difficult to provide both customer support and rapid resolution of total losses.
Lender forbearance programs have helped reduce the vulnerability of customers during the pandemic, as have stimulus checks, unemployment benefits and other financial aids. In fact, auto loan delinquencies and lender losses reached record levels during the pandemic thanks in large part to the help of lenders.
But with the uncertainty surrounding a second round of stimulus checks and the lack of auto loan coverage under the CARES Act coronavirus relief, many consumers could face economic hardship again. Even if the financial aid is extended, the vehicle debt goes nowhere. Client delinquency and default are likely to become more frequent. So do customer complaints and phone calls.
Why lenders are going digital
With the increasing use of remote work, digitization is becoming more and more vital. For auto lenders facing high customer call volumes, it’s more important than ever to create a seamless digital experience to maximize resources. But many total loss workflows still rely on phone and paper processes, which increases the time spent with insurance companies on the title release process.
By digitizing total loss workflows, lenders can streamline the exchange of information and documents with carriers while receiving total loss notification sooner. With near real-time alerts When a financed vehicle is declared a total loss, lenders can proactively communicate with customers to minimize the likelihood of missed payments.
A bad experience of total loss could erode confidence in the lender. Conversely, improving the experience could go a long way in building customer loyalty and loyalty.
Learn more about how CCCs Total Loss Care – Privilege Holder Portal helps lenders streamline processes and improve customer satisfaction after total loss.
