Deeper Auto Loans Call For Better Dealer

Deeper Auto Loans Call For Better Dealer Security Practices
By David Meyer
Executive Vice President, Sales & Services Automotive Solutions
Spireon, Inc
Industry Trends & Outlook Series from Spireon
The Current Market Situation with Subprime Auto Loans & Finance:
Subprime auto loans are at a record high and continue to climb. As investors have
started investing again and credit has freed up, so have credit standards. Lenders and
dealers are going ever-deeper with subprime loans. And that means more creditchallenged customers who might not otherwise be able to afford vehicles are getting into
cars that allow them to get to work. That’s good news, right?
What $336B in Auto Subprime loans means to your dealership:
The downside is that it also means that the risks of delinquencies are on the rise.
Currently, subprime auto loans account for $336 billion in car loans — that’s 38.7% of
all loans. As lenders adopt riskier practices to go deeper with loans, they’re loosening
standards on loan applications, extending loan terms to as long as 96 months, and
increasing loan amounts. This contributes to the rise in delinquencies — at the same
time costing lending and dealerships substantial money in repossessing vehicles. In fact,
car repossession rates for Q2 2014 were 70% higher than the Q2 2013 rates.
Why Dealer Management needs to pay attention to Subprime Auto Loans:
If this all sounds vaguely familiar, it may be because the subprime auto lending boom
harkens back to the subprime mortgage bubble that burst in a very big and messy way
not too long ago. Dealers who don’t recognize this repeat trend, and who don’t prepare
for it, are setting themselves up for substantial losses if and when the subprime auto
lending crises hits.
What seems to be a solution for Subprime Auto Dealers and Lenders?
Enter the Internet of Things (IoT) and machine-to-machine (M2) solutions like GPS
vehicle tracking systems and payment devices. IoT refers to the interconnection of smart
devices, which share data across the Internet. For example, GPS tracking devices
installed in vehicles capture and transmit a wealth of data to smart phones, tablets,
laptops and desktop computers used by dealers to track and protect their vehicle assets.
Deeper Auto Loans Call For Better Dealer Security Practices
How GPS Asset Tracking Systems Work:
The use of IoT and M2M solutions like GPS asset tracking systems is a powerful,
effective and attractive way to reduce the risk that comes with deep subprime auto
lending. The best of these systems not only allows dealers to locate vehicles, but to
automate and improve STIPs verifications, predict and address delinquent behavior,
keep customers on track with their payments, and drastically reduce the time and costs
associated with repossession.
What your dealership needs to be doing about Privacy & Compliance:
That all sounds well and good. However, just as it’s important to make sure you’re
performing your due diligence when qualifying customers for subprime loans, it’s
equally important to make sure your GPS vehicle tracking system complies with federal
and state regulations.
The Feds are watching & what you can do about it:
The growing prevalence of IoT among businesses looking to capture and leverage data
about their customers, as well as automate business tasks, has gotten the attention of
federal and consumer-protection agencies. The FTC recently released a report on IoT,
recommending several steps businesses can take to protect their customers’ privacy and
Among their recommendations are building security into devices from the get-go,
deploying multiple layers of security controls, preventing devices and data from falling
into the wrong hands, and closely monitoring devices at all times.
So the question you should be asking yourself as a dealer is: Does my GPS
vehicle tracking system and payment device do all these things?
Make sure the asset management system and solution provider you choose is taking all
the right steps to protect and secure your devices and consumer data.
A Simple Solution for Compliance in your dealership:
The GoldStar CMS GPS vehicle tracking system does exactly that. At Spireon
Automotive Solutions Group, we’re way ahead of the consumer data protection curve.
Our GoldStar CMS GPS vehicle tracking system acts as your trusted partner in
protecting consumer data. That’s because GoldStar CMS is built on our award-winning
NSpire platform — an ultra-secure cloud-based environment that incorporates a multilayered security approach just like the one the FTC recommends.
The NSpire network is comprised of multiple Tier 3 and Tier 4 data centers strategically
located nationwide. Adhering to stringent security controls and protocols, these data
centers are only accessible to people with high-level security clearance, and employ a
host of leading-edge physical security features and measures to protect consumer data.
The drill-down detail on what is backing up this vehicle tracking system:
These top-tier data centers have dedicated security experts who use the latest tools for
combatting security threats. What’s more, they’re monitoring your customers’ personal
data 24/7, year-round — not splitting their security duties with other IT tasks. And they
regularly update their security procedures to counter the most recent attack strategies
and trends. On top of all that, our own IT team runs weekly security scans against all
external-facing systems to proactively catch any potential vulnerabilities before your
customer data is put at risk.
Why Buy Here Pay Here dealers are adopting what Spireon is doing:
At Spireon Automotive Solutions Group, we’re not just engineering robust security
features into our technology. Consumer protection and privacy is ingrained in our
culture. We’re actively educating the automotive finance industry about best practices in
consumer privacy and compliance through white papers, speaking engagements,
articles, blogs and more. We’re also active members of NABD, Leedom, NIADA, PATA,
NAL and other leading industry organizations, and are working with them to equip
automotive lenders and dealers with compliance tools. And we’ve partnered with
leading law firm Hudson Cook to develop policies, procedures and disclosure forms
lenders and dealers can use to help protect their own organizations. Currently, we’re in
the process of completing SOX (Sarbanes-Oxley Act) compliance to ensure our solutions
support full disclosure.
The Bottom Line:
Bottom line: You’re in the business of putting people into cars when no one else will. IoT
and the right GPS vehicle tracking system will help you mitigate the risk of going deeper
with your loans. But you must make sure you’re doing the proper diligence on the front
end. And you’re wise to make sure the GPS vehicle tracking system and solution
provider you work with is helping you comply with regulations around customer data
privacy. Not only to protect your customers, but also your bottom line.
To learn more about our commitment to consumer privacy and protection
and our GoldStar CMS vehicle tracking solution, call 1-866-655-8825.
David Meyer
Executive Vice President, Sales & Services Automotive Solutions
Spireon, Inc.
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