Table of Contents:
Lending
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4 min read
Table of Contents:
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How Proactive Maintenance Protects Your Loan Portfolio
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Reduced Payment Delinquencies
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Preserved Collateral Value
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Lower CPI and GAP Claims
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Increased Member Satisfaction and Retention
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The Smart Solution: SWBC’s Maintenance Benefit Agreement
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What’s Included
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Why Lenders Love It
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Every vehicle on your loan portfolio represents more than a loan balance. It also represents an investment that your financial institution relies on for performance and profitability. Poor vehicle maintenance can lead to costly repairs, borrower delinquencies, and diminished collateral value. In this blog, we’ll explore why proactive maintenance matters for lenders and how offering a Maintenance Benefit Agreement can protect your bottom line while generating new non-interest income.
Every Poorly Maintained Car Is A Financial Risk To Your Institution
When a borrower neglects their vehicle's upkeep, it doesn’t just impact them; it puts pressure on your financial institution. From decreased resale values on repossessed vehicles to increased loan defaults and insurance claims, vehicle neglect has a direct impact on your loan performance and profitability. Consider the risks:
- Costly repairs increase financial strain, raising the risk of payment delinquency.
- Neglected vehicles depreciate faster and have lower resale values if repossessed.
- Breakdown-related accidents can trigger collateral protection insurance (CPI) claims, adding to your loss ratios.
Proactively addressing these risks isn’t just good borrower care, it’s smart portfolio management.
How Proactive Maintenance Protects Your Loan Portfolio
Encouraging regular vehicle maintenance doesn’t just benefit borrowers, it directly impacts your financial institutions’ interests. How? Keep reading to find out.
Reduced Payment Delinquencies
Unexpected, expensive repairs often lead to financial stress and missed payments. Offering your borrowers affordable, routine maintenance solutions helps them avoid these financial pitfalls and keeps your loan payments on track.
Preserved Collateral Value
Well-maintained vehicles retain their value longer. In the event of a repossession, higher collateral values means stronger recovery rates for your financial institution.
Lower CPI and GAP Claims
Accidents and breakdowns caused by neglected maintenance increase the likelihood of insurance claims, impacting your loss ratios and overall risk exposure. Preventative care means fewer surprises for both your borrowers and your institution.
Increased Member Satisfaction and Retention
Offering proactive solutions like a Maintenance Benefit Agreement demonstrates that your financial institution cares about your borrowers’ financial well-being—not just the loan balance. This can help build loyalty and improve long-term member relationships.
The Smart Solution: SWBC’s Maintenance Benefit Agreement
To help make proactive maintenance simple and accessible for your borrowers while also generating non-interest income for your financial institution, SWBC offers a Maintenance Benefit Agreement you can sell at any time. It’s a practical, cost-effective plan that covers routine services and unexpected roadside expenses.
What’s Included:
- Oil changes
- Brake pads/shoes
- Battery replacement
- Safety inspections
- Cooling system maintenance
- Wiper blade replacements
- Cabin air filters
- Roadside assistance
- A mechanic on call
- And more! All fully insured by an “A” rated carrier.
Why Lenders Love It
- Non-Interest Income Growth
Every agreement sold generates immediate revenue.
- Loan Portfolio Protection
Well-maintained vehicles mean fewer defaults and stronger collateral values.
- Stronger Borrower Loyalty
Offering real value beyond just the loan makes your financial institution a partner, not just a lender.
Protect Your Investment, Grow Your Revenue
Every vehicle you finance is an asset worth protecting. Encouraging regular vehicle maintenance is a strategic move that benefits both your borrowers and your financial institution.
With SWBC’s Maintenance Benefit Agreement, you’ll have the opportunity to reduce delinquencies, protect collateral value, and drive new non-interest income while providing meaningful benefits your borrowers will appreciate.
Ready to put your auto loan portfolio on a better road? Contact SWBC today to learn how our Maintenance Benefit Agreement can strengthen your loan performance and increase your revenue potential.
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