Managing collections often involves juggling numerous metrics, leaving you with the constant sense that there could be smarter, more effective ways to measure success. Recognizing the need for clarity and focus, this blog presents a selected list of simple, clear, and impactful metrics.

These metrics will help you pinpoint critical improvement areas in your auto loan collections operation, streamlining your efforts for better efficiency and effectiveness.

Understanding portfolio performance

Starting with high-level metrics that will help you understand how your loan portfolio is performing:

• Delinquency rate: The percentage of balance that is past due.
  
  Delinquency rate = (Delinquent loan balance) / (Total outstanding loan balance)
  

• Roll rate: The percentage of balance ($) moving from one delinquency bucket to the next.
  
  Roll rate_X,X+1 = (Balance in bucket_X+1) / (Balance in bucket_X)
  
  
• Cure rate: The percentage of the delinquent balance that returns to the current status for each bucket.
  
  Cure rate = (Delinquent balance that paid full delinquent balance) / (Total delinquent balance)
  
  
• Repossession rate: The percentage of active accounts that end up repossessed.
  
  Repo rate = (Balance of repossessed loans) / (Total balance of active loans)
  
  Some more related metrics that track the performance of your repossession process:
  
  
  • New repo liquidation percentage: Balance ($) generated from all the repossessions in a given period.
    
    New repo liquidation % = (Balance($) received from repo exectued in the period) / (Total balance ($) in repo stage)
    
    
  • Avg residual balance: The average balance ($) remaining after all repos that were unable to cover the full balance of the loan.
    
    
• Recovery rate: The percentage of the total outstanding debt successfully collected after charge-off.
  
  Recovery rate= (Amount recovered) / (Amount charged off)‍

These metrics provide clear visibility into your portfolio’s health and can pinpoint specific areas needing further investigation.

For instance, a deteriorating delinquency rate and roll rate with a healthy cure rate might indicate insufficient reminders being sent to customers.

Collections effectiveness metrics

After identifying your portfolio trends, here is how you can track the performance and effectiveness of your collections processes.

• Cost per collection attempt: Average expense incurred for each attempt made in an effort to collect on a delinquent account.
  
  Cost per collection attempt = (Total cost of collection efforts) / (Number of attempts made)
  
  You can use the same metric to calculate the cost-effectiveness of your different collection campaigns and strategies as well.
  
  
• Right Party Contact (RPC) Rate: Measures the ratio of outbound calls made to the correct individual owing the debt.
  
  RPC rate = Right party connects (RPCs) / Total outbound calls made
  
  
• Promise-to-Pay (PTP) Rate: Indicates the percentage of accounts who commit to pay
  
  PTP rate = (Accounts commited to pay) / (Total number of RPCs)
  
  
• Payment rate: Tracks the percentage of successful payments against the total collection attempts.
  
  Payment rate = (Accounts with payments) / (Total number of accounts with RPCs)

‍You can combine the above metrics to understand which strategies are working well for your team and then scale it further.

Key digital channel metrics

As digital communication becomes increasingly prevalent, traditional metrics need to be supplemented with KPIs tailored for digital platforms:

• Engagement Rate: Measures interactions (such as opens or clicks) received on digital communications relative to the total delivered.‍
  ‍
• Payment Portal Visits: Tracks the total traffic to your payment portal within a specific period.
  

• Portal Payment Rate: Calculates the number of payments received relative to total portal visits.

We’ll dive deep into all the metrics related to digital channels in a subsequent blog.

​​Get started today

Managing numerous data points scattered across disparate platforms, each requiring meticulous cleaning, labeling, and integration into a central analysis hub – it is daunting!

Prodigal excels in sourcing insights from complex unstructured data, merging those new insights with your existing data sources, and producing successful strategies to increase collections and reduce costs. 

Our purpose-built AI and ML models are designed to streamline this process, offering you direct insights and recommending actions.

We offer consumer intent-to-pay scores, tailored messaging, frequency recommendations, and personalized offer strategies – all optimized to enhance your collection efforts.

Want to talk about best practices and learn from real success stories? Schedule a no-commitment call with team Prodigal.