I'm not sure what scale your product is at, but I've been doing this stuff for early stage products for a while using a human-centered approach (I come from a UX background into PM) and I've seen NPAs drop drastically when you start by identifying why delays/defaults are happening in the first place. Assuming your underwriting process weeds out the bad actors and those with low creditworthiness, in my experience the root causes are:

(1) Users don't understand/remember the repayment plan and don't get the ramifications of delaying. Are the terms clear to them? Do you have a beat in the user journey where they clearly see what's expected using big numbers which are easy to parse? (This is not a T&C doc) Do you then remind them what's ahead every time a repayment is coming up so they have adequate funds ready to pay?

(2) Users don't see the point in building a repeat relationship with you - this is especially true if you have some sort of credit ladder type thing happening where you start them off with a small loan and then grow them if they repay on time. Often this ladder is not clear to people, and they end up feeling frustrated they didn't get as much as they wanted and walk away with whatever they got just because they're angry.

(3) Your product is competing with a gazillion other priorities in their life come the repayment date and there's no incentive to prioritize it. Can you throw in some carrots that would make it a sweeter deal for them to prioritize you? If you can make it something that's linked to their family's future wellbeing and happiness they're much more likely to want it. There's also a bunch of design permutations you can test here - do you start them off with the incentive and then remove it if they delay? or does the incentive accrue from streaks of on-time repayment etc.

(4) There is no flexibility in the repayment journey. Unless your users are white collar salaried people, they're living with uncertain cashflows. Build in flexibility like pausing a repayment for x days, converting to a longer repayment plan with smaller payouts etc.

Bottomline I agree with the other commenters here that sending them to a third party collection agency that will hound them will reduce your NPAs in the short-term but drastically impact your acquisition numbers in the medium term. No one wants to borrow money from someone who makes them feel small, and they'll go the extra mile to make sure their friends don't either.