Outdated Communication Tactics Are Impacting Subprime Auto Lenders

Outdated Communication Tactics Are Impacting Subprime Auto Lenders

Subprime auto lenders are witnessing unprecedented delinquency rates. The introduction of new tariffs and the already high costs of living is making it harder for consumers to make ends meet. When consumers miss a loan payment, traditional methods such as static texts, generic emails, or mailed letters, are proving ineffective in prompting timely payments. To navigate this crisis, lenders must adopt empathetic, personalized communication strategies that resonate with borrowers' current realities.

The Escalating Delinquency Crisis

Recent data highlights the severity of the situation:

• Subprime auto loan delinquencies (30+ days past due) surged to 17.3% in December 2024—the highest level since 2018.
  (S&P Global)

• 60+ day delinquencies reached a record 6.56% among subprime borrowers.

• 90+ day delinquency rates rose to 4.8% of outstanding auto debt in Q4 2024, which is a 15.8% year-over-year increase.
  (LendingTree)
  
  

These figures underscore an urgent need for lenders to evolve beyond outdated outreach tactics.

The Shortcomings of Traditional Outreach

Conventional methods are falling short for several reasons:

• Generic messages fall flat: One-size-fits-all outreach doesn't connect with borrowers facing personal financial strain.

• Digital fatigue is real: Consumers face over 4,000 business messages daily—messages that aren’t personalized are ignored.

• Static campaigns don’t adapt: Traditional emails or letters lack timing optimization and message flexibility, reducing impact.
  
  

KredosAi Empowers Auto Lenders to Communicate Smarter

KredosAi is helping subprime auto lenders rethink how they engage with past-due customers. Our platform delivers compliant, personalized, and dynamic messaging at scale, tailored to where each borrower is in their journey. Lenders using KredosAi have seen results like payments arriving 3–6 days earlier, higher payment arrangement completion rates, and dramatic reductions in suspension and cancellation rates. By combining real-time experimentation, channel optimization, and empathetic messaging, KredosAi helps auto lenders boost recovery without sacrificing customer trust or long-term value.

How to Drive Long-Term Value from Past-Due Customers

Borrowers who feel understood are more likely to respond, and more likely to stay. Empathetic messaging fosters trust and transparency, which can increase customer lifetime value (LTV) and reduce churn, especially in tough financial times. Instead of alienating customers with threats or robotic reminders, lenders who communicate with humanity position themselves as allies, not adversaries.

The Path Forward

Delinquencies are rising, and borrowers are overwhelmed. Auto lenders can no longer rely on outdated, impersonal communication methods. To drive real results, they need to connect with customers using personalization, relevance, and timing. KredosAi enables exactly that, helping lenders move beyond static outreach and into a smarter, more effective future.