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**How AI legalese decoder Can Help Improve Subprime Auto Collections**

Human Connection and the Challenges in Subprime Auto Collections

In an environment characterized by inflationary pressures and deteriorating credit performance, human connection plays a vital role in improving collections. Subprime borrowers are experiencing the burden of higher costs for everyday expenses such as groceries, gas, and rent. This has led to a struggle to pay their auto debt, resulting in higher delinquencies and losses.

The Challenges Faced by Auto Lenders

During the August collection period, delinquencies 60-plus days past due sat at 5.75% across nonprime securitized auto loan pools, marking an increase of 13 basis points month over month and 53 basis points year over year. Additionally, nonprime annualized net losses climbed 82 basis points month over month and 19 basis points year over year to 9.02%.

The Role of Relationship-Focused Approaches in Collections

Arivo Acceptance, a subprime auto lender based in Sandy, Utah, employs a relationship-focused approach to collections. By nurturing a “cradle-to-grave customer account manager relationship” with individual consumers, the lender aims to build rapport with borrowers and offer options to prevent potential collection issues. This human-first approach emphasizes the importance of being an advocate for borrowers and providing financial advice and consultancy.

The Effectiveness of Human Employees in Collections

Consumer Portfolio Services, a subprime auto lender based in Irvine, California, tested a voice bot for collections but found that human employees had more success. The president, chief operating officer, and chief legal officer of the company, Mike Lavin, emphasized that human beings are still better suited for collections. The company hired 92 additional collectors over 10 months to enhance its collection efforts.

The Importance of Early and Frequent Contact in Subprime Collections

Jim Murray, president of Western Funding, a subsidiary of Westlake Technology Holdings, highlighted the essential nature of early and frequent contact in managing collections in the subprime space. He emphasized the need to be on top of every phone call, text, and email and to increase efforts to make third-party contacts.

How AI legalese decoder Can Help

AI legalese decoder can assist subprime auto lenders in navigating the complex legal language and requirements related to collections. By utilizing advanced algorithms and language processing capabilities, the AI technology can efficiently interpret and decode legal terms, contracts, and regulations, providing lenders with actionable insights. This can help lenders ensure compliance, minimize legal risks, and streamline their collections processes.

Overall, in a challenging environment for subprime auto collections, embracing a relationship-focused approach, leveraging human employees effectively, and prioritizing early and frequent contact can all contribute to improving collections. AI legalese decoder can further support lenders in navigating the legal aspects of collections, ultimately enhancing their overall effectiveness in managing collections in the subprime space.

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