Nine out of ten customers who had defaulted on a vehicle loan kept their car in a study of 2,000 rehabilitation visits over the first three quarters of 2015 by recoveries law firm Ascent.
Of the 90% who keep the car, 62% came to a financial arrangement to bring their arrears up to date within an acceptable time frame, 25% paid of the arrears in full and 3% paid the entire loan off.
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David Whittaker, chief operating officer from Ascent said: "The landscape of the motor finance market is changing. Driven by the FCA’s ‘Treat Customers Fairly’ principles, we have seen a shift away from the short and sharp collection and recovery practices of the past. With change comes an opportunity to consider what options and measures are appropriate to manage a variety of ever present challenges, arrears management being one."
He said that while repossession and shortfall collection activities were still necessary tolls of the trade, they had been complimented or replaced with extended periods of forbearance and customer rehabilitation visits.
"Reconnect and repossession are two very different things and should be managed separately by specialists at different parts of the collection cycle. Reconnect and rehabilitation visits can prevent escalated actions such as pre legal collections and repossession," Whittaker concluded.
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By GlobalData
