I am sure you have heard news organizations describe the last three to four years as the worst recession in America since the Great Depression. We have never experienced a longer period of high unemployment. When someone is on unemployment in our state they receive a ReliaCard. This is a prepaid debit card that the state loads benefits on each week. It seems we are receiving 25 percent of our payments from those cards.
I cannot tell you how many people I have had in my office due to a layoff in the household. It seems with some of our married customers the husband and wife are trading off being out of work or moved to part-time. Combine that with gas prices and it is a wonder we keep our collections at the level they are.
I was explaining our business to a civic group the other day. As usual, I get questions after the initial discussion, mainly about repos and funny situations I have experienced when dealing with the public. At this meeting I was asked about being in the loan business during the worst economy since the depression. That was when it hit me. Four years ago in May gas touched $4 a gallon for the first time in decades. Since then, we have seen unemployment over 10 percent (arguably, 18 percent was the real number) and available inventory to purchase dropped to about a third of 2007 levels. We have witnessed customer after customer lose work, go part-time, get laid off, and go on unemployment or other government assistance. I watch our numbers almost constantly and realize that our portfolio has been performing at or above the same level this entire period. As we went into the summer of 2008, we experienced a drop in current accounts and recency combined with an increase in repos, mainly the “heavies” like Expeditions, Durangos and full-size trucks. Once we reached September 2008, our numbers returned close to our norms and have remained steady since.
Why am I telling you this? I believe this to be a huge accomplishment! Policies and procedures combined with diligence has been the key. A great crew is a big help. Seeing our business through someone else’s eyes helped me realize what we have accomplished to this point and I felt more pride than usual.
It’s not over. The economy is shaky and gas is on the rise again. I feel that folks are getting tired of the struggle. I know our industry will have a rough summer to endure with the CFPB and Dodd/Frank bringing more regulations, combined with the other factors continuing to create a stiff headwind for our economy. Keep an eye on your numbers. Check your policies and procedures for places you can improve so your portfolio remains healthy. Soon, we will be talking about not only surviving the Great Recession, but thriving through it.
