Car Loans and Car Repossessions

Hi,
Banks and financial institutions spend millions of dollars annually monitoring their auto portfolios. When a car loan becomes delinquent, the first step is generally written notification to the customer that the payment is past due. If no payment is received, the letter is followed up with a phone call. Every institution has different rules as to how far it lets a car loan become past due before it repossess the car. A general rule of thumb is that the small independent car dealer will be more apt to repossess a car more quickly than his or her larger counterparts. For a customer to recover a repossessed car, it is generally necessary for the customer to bring the account current and pay all repossession costs. It is important to note that the account will be flagged once a repossession has occurred. Flagging an account means that the creditor will not tolerate future delinquencies. If a customer chooses not to retrieve his or her repossessed car, the following will happen:
1) The car will be sold by the financial institution/car dealership.
2) The proceeds from the vehicle sale will be applied to the loan balance.
3) The customer will be responsible for any deficiency balance.
4) Deficiency balances may be collected in a variety of different ways including litigation.
No financial institution wants to repossess a car. It's a lose/lose situation for both the institution and the customer. If a customer has difficulty making a car payment he or she needs to call the company holding the car loan and make suitable arrangements.
Tomorrow I'm going to talk about how to handle other types of past due or disputed bills.
Until then,
Alan