No one wants to be in a collections department. There are numerous scenarios of how a person ends up in a collections department, with most being they simply forgot! However, there are some out there who may never pay back that loan, whether it’s because life happened, and they simply can’t, or they simply won’t. Here are our tips to keep your collections department in the black.
Collecting starts with the loan officers themselves. When a loan officer sits down and begins to fill out the application with the applicant, the loan officer needs to ensure they are getting the correct contact information and references. It’s easy to assume a member will make their payments on time, but no one can account for life’s interferences. Since a loan officer is the “first impression” of the loan process, it’s crucial that they are properly trained for different scenarios.
Loan officers are a representation of the credit union and your members will consider the credit union for their next loan if they have a smooth and easy application process. The most beneficial quality a loan officer can have is explaining every part of the loan to a member. The loan officer should review and explain what the member is responsible for paying every month, when it’s due, who they can reach out to for any concerns, and delinquency consequences if that were to be the case.
Now that your loan officers are trained, what’s next?
Why do people borrow from a credit union? They choose a credit union for the personal connection and experience. They choose a credit union to ensure their needs are met and guarantee they will have financial success. How your loan officers personalize this experience is key for those members coming back. It is critical that your credit union is the member’s top pay off priority and is consistently paying back their loan. If a member does forget or have a life incident, the loan officer that booked the loan should make the first call to the member. This will help the member remember the credit union is only looking out for them.
Once the loan is booked, there are a few other steps a loan officer can take to help the member make sure they will be able to make their payments and account for life’s incidences. The loan officer can suggest automatic payments or even placing a full payment in a savings account for a rainy day in the member’s future, if the member is not given a skip-a-pay on the first payment.
If the credit union trains their loan officers well, the credit union will reap the benefits with more good loans than bad. At the end of the day, the member is the credit union’s top priority.
