HOUSTON — The National Alliance of Buy-Here, Pay-Here Dealers recently held its three-day Underwriting and Collections Conference in November. Several key topics took center stage, including GPS device analysis, DMS solutions, collections, underwriting and regulatory compliance, among much more.

"The conference included seven interactive panels, covering collections, underwriting, payment devices, integrated DMS solutions, managing collection operations, legal and regulatory compliance and best practices," explained Ken Shilson, CPA and conference chairman.

These interactive sessions were designed to allow attendees the opportunity to interact with many of the nation's leading experts and operators, he continued.

"The knowledge level of the panelists and attendees was truly exceptional this year," Shilson said. "Attendees left with many new ideas on how to solve the challenges and capitalize on the opportunities which exist today in BHPH."

The legal and regulatory panel included attorneys Leslie Bender on privacy, Tom Buiteweg on bankruptcy and leasing, Tom Hudson on federal compliance and Terry O'Loughlin on regulatory.

"Attendees commented that the legal and regulatory coverage was exceptional this year," Shilson pointed out.

Meanwhile, Ron Brown conducted sessions on advanced skip-tracing techniques and organizing a successful recovery operation.

"In the rising default environment of today, maximizing recoveries have never been more important," Shilson highlighted.

As for Shilson's presentation, he released a comprehensive independent study on the use of payment devices which measured the impact of these devices on defaults and bad debt losses.

His study also differentiated between the various types of technology and their related performance. His report was conducted by Subprime Analytics and included more than 80,000 originations, which utilized these devices.

One of the trends Shilson analyzed was how code-based systems can impact defaults. He found that with a CBS device, those loans had a 28 percent default rate. Meanwhile, those without a CBS device showed a 29.4 percent default rate.

"In addition, these devices improve delinquencies and reduce collection costs," Shilson pointed out.

Furthermore, he said CBS devices cause customers to prioritize their car payments, which can reduce delinquencies. Operators say that collectors can potentially handle twice as many accounts when CBS devices are used, he continued. This can help improve collection efficiencies.

"CBS devices make operators more consistent in their collection efforts. Lower gross losses. This is a proactive tool," Shilson explained.

"CBS devices reduce net bad debt losses after recoveries. Also, they alter customer behavior by making the customer call the lender rather than vice versa," Shilson said.

Another topic he analyzed was GPS devices.

Shilson discovered that when GPS devices are used, the default rate averages about 27 percent. Without these devices, the default rate comes in at about 29.4 percent

"GPS devices produce lower default rates because they deter customers from walking away from the deal," Shilson stated. "GPS devices also produce lower default rates because they allow operators to keep communication with the customer when they don't pay. It's a re-active tool."

He went on to indicate that these devices can increase recoveries and reduce net bad debt losses.

"GPS devices are newer in usage to the industry so more data is needed to truly measure their impact on collections and recoveries," Shilson told attendees. "We found that operators activate these devices differently in their application. This impacts results.

"GPS seems to impact recoveries more than delinquency," he added. "It also has a definite ‘wow' factor for the capital markets."

Dwight Cope, president of Western Funding, said, "We have been using code-based SI devices since 2007. More recently we have been using dual devices. These devices have positively impacted the delinquencies in our portfolio and reduced our losses. The use of these devices has been beneficial."

John Troxell, vice president of ACC Motor Acceptance Corp., pointed out, "Nine years ago we decided to require code-based SI devices on all loans we originate. That has been one of our most profitable decisions. By installing such devices, it encourages our customers to maintain a good payment history, which assists them in improving their credit scores."

Offering a bit more analysis, Shilson looked at PassTime data for late-paying customers under 30 days past due and those 30-60 days past due.

For late customers under 30 days past due, Shilson found that with dual devices, this figure comes in at about 5.85 percent. For those transactions that include CBS, the number is 16.71 percent.

As for customers who are 30-60 days past due, late payers with vehicles that have dual devices come in at about 1.72. With the CBS device only, this figure grows to 3.10 percent.

Shilson said more analysis is needed, but that these devices do appear to have a positive impact on default rates, recoveries and collections.

Continuing on, Shilson and Rick Potter, president of CAR Financial, jointly delivered a presentation on the latest industry benchmarks, loss trends and provided a perspective on the capital markets for BHPH operators.

Finally, the program concluded with a best idea contest, which was won by Mark Dubois, of CarBiz. All of the best ideas will be posted on the NABD Web site, along with many of the presentations, Shilson noted. The site can be found at www.bhphinfo.com.

The exhibit hall featured the latest technology, products and services, which can enhance underwriting and collection results.

"Our special thanks to all those sponsors who continue to support the BHPH industry and who made this event possible," Shilson said.

One of the attendees, Peter Ghan, owner of a Thrifty Car Sales franchise in Stafford, Texas, said, "After 11 years in the industry, coming to this conference shows me how much there is still to learn. As our laws become more complicated, NABD conferences always provide me with good, free information that can help avoid unwanted lawsuits. It is becoming more and more important to better manage cash flow, save money and understand how to run the back side of our company."

Daphne Hogg, of LOFI Motors in Corpus Christi, Texas, pointed out, "I have only been doing BHPH for 1.5 years and have learned a lot that I am doing wrong and little that I am doing right."

Charles Pompey, owner of Carlotta Credit & Car Sales in Blakely, Pa., added, "I enjoyed attending and brought some excellent info back for my company. You did a great job as always."