There are many variations to repossession strategies but the one that generally gets the best auto recovery results for credit unions has 5 simple elements.
- Multiple repo agents or repossession management firms (forwarders)
- Relatively short assignment durations
- Multiple rotations for pre-charge off and post charge off
- Frequent and transparent scorecards
- A process for rewarding and penalizing repo agents/forwarders based on performance
These 5 basic elements can be used among credit unions of all sizes. Before implementing, you should analyze your current auto repossession strategy and assess which of the 5 elements above are needed. Below is additional perspective on each issue:
Multiple Vendors – Depending on your repossession volume, the optimal number of agents/repossession management companies seem to be 3-4. For smaller credit unions, this number may be 2-3. Having multiple repo agents or forwarders help create real competition.
Assignment Duration – Probably the biggest mistake that we see many credit unions make, is leaving assignments with a repo agent or forwarder/skip companie too long. After a certain period of time, the agent/forwarder is putting little effort into progressing the case. If your agents/vendors have not recovered the vehicle in a certain time period, it is highly improbable that they ever will.
Multiple Rotations – We suggest having 5 rotations during the entire repossession process:
- Pre-Charge Off: 1 forwarder/agent placement + 1 skip placement
- Post Charge Off: 3 skip placements (60,90,90-day duration)
Regular/Transparent Scorecards – We suggest the below approach for the best results among your multiple vendors:
- Published at least monthly
- Transparent which means that the scorecard methodology is fully disclosed to each vendor
- Batch Focused
Rewards/Penalties – Some credit unions have figured this out and reallocate market share at least once per quarter and the top 1-2 performers get the lion’s share of the business.