Borrower Didn’t Make Their Payment? Maybe They Just Forgot
When borrowers gets squeezed, who will they pay first? According to a survey conducted by Lexop, American respondents ranked mortgage and rent payments as having the highest priority among recurring bills. Utilities (water, electricity, and gas) came second, car loans third, phone/internet bills fourth, and personal loan payments dead last. That may not be what lenders want to hear but the information could prove helpful in preparing for an economic downturn.
Notably, a missed payment may not even be a sign of financial stress. According to the same Lexop survey, 34% of respondents stated that the primary reason they had for being late on a bill was that they simply forgot. A majority also disclosed that they were late in paying because of other non-financial issues like invoicing errors, not having access to the bill, payment method issues, and more.
These seem like addressable issues especially since 35% of respondents wanted digital reminders via text or email. Less than 10% preferred they be reminded via phone call or snail mail.
“Empowering consumers to work with collectors toward meeting their payment goals is the best way to foster healthier business-customer relationships that will ultimately result in increased debt recovery and customer retention,” said Amir Tajkarimi, Chief Executive Officer and Co-founder of Lexop, in a published statement related to the findings. Tajkarimi was a panelist on The Need for Speed in Payment & Collection at the Canadian Lenders Summit in Toronto this week. There, he explained that his firm was hyper focused on improving the collections user experience and emphasized that a missed payment is not always the result of a borrower not having the resources to pay.
The data revealed from the study is timely since 60% of respondents also shared that they were concerned about their ability to pay bills over the next 6 months.Last modified: November 18, 2022
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.