As the holiday season ramps up, so does consumer spending…and financial stress. From travel expenses to gift-giving splurges, borrowers often face sharp increases in personal debt as we near the end of the year. These behaviors have a direct impact on loan payment behavior, leading to increased late payments, higher default risk and an overburdened servicing staff.

Auto loan delinquencies are at their highest levels since the Great Recession, reshaping risk for lenders and servicers. Here’s how to protect your portfolio and your bottom line.

Delinquent payments affect revenue timelines and require coordination across servicing, compliance and finance teams. Failed attempts add manual effort, borrower outreach and reconciliation work.

Borrowers have changed. Has your payment strategy?

Why Payment Flexibility Matters Now

Consumers expect flexible payments everywhere, from subscriptions to buy-now-pay-later at checkout. For businesses, offering installment plans builds loyalty, improves cash flow and even reduces delinquency rates.

Credit unions stand out in the financial world with their close connection to the community. Their members are different from account holders at a bank, for example. Helping those members stay current on their financial obligations is a real part of the mission for a credit union, as opposed to a faceless ledger item.

How many times have you used a digital payment method in the past week? Maybe you used a mobile checkout for your latest grocery order. Or maybe you used text-to-pay for your water bill. As these methods become more common, they cease to become a curiosity and become more of an expectation. 

Auto loan payments shouldn’t be complicated. But for many borrowers (and the lenders serving them) making or processing a simple monthly payment can still involve outdated systems, limited options and unnecessary frustration. In today’s digital world, that’s a serious problem.

In today’s financial landscape, credit unions face increasing pressure to do more with less. With rising operating expenses, evolving compliance demands and growing member expectations, finding sustainable ways to manage costs has never been more important. Traditional payment processing methods are expensive, time consuming and increasingly out of step with what members expect in a digital-first world.

Debt collection agencies operate in a uniquely challenging environment. Tasked with recovering overdue payments, they must navigate stringent regulations while delivering a customer-friendly experience that encourages repayment. Low recovery rates, outdated systems and the need to handle high transaction volumes only add to the complexity.