Hi,
For various reasons, many people find themselves faced with a sizable deficiency balance from a car, camper, trailer home etc., loan. In most instances, deficiency balances could be settled for far less than the amount represented by the creditors, or, in many cases, third party collection agencies. The keys to negotiating a successful settlement on a deficiency balance are:
1) The length of time the deficiency balance has been owed. If the deficiency balance has been accruing interest for many years, the creditor will take substantially less money to settle.
2) The payment history on the loan prior to the deficiency balance being created factors into the willingness of the creditor to negotiate a settlement on the balance.
If only one or two payments have been made on the loan prior to repossession, it is unlikely that the creditor will be willing to offer much of a settlement.
3) When a creditor receives a settlement offer, one of the first things the creditor does is analyze what he or she believes to be a reasonable settlement offer and the ability of the debtor to repay the deficiency balance in full. It is necessary to give all the pertinent details as to why the settlement offer is legitimate and is the best that can be done by the debtor.
4)If the deficiency balance that is owed is being handled by a third party, and the third party refuses the settlement offer, be sure to contact the original creditor and offer the same settlement to the creditor. In most cases, the creditor will accept a reasonable settlement.
5) If it is not possible to come up with a lump sum settlement, offer a payment schedule that can be kept. Once again, if the third party refuses the payment schedule, contact the original creditor and explain why that is the only available solution to handling the deficiency balance.
When negotiating any deficiency balance, keep in mind that the creditor is entitled to 100% of the balance and will only accept a settlement if it is financially justified. As soon as a deficiency balance is created, be sure to get in touch with the creditor, as communication is the key. A Performance Bond guarantees the faithful performance of the contract and payment of materials and labor by the contractor to all subcontractors and material suppliers.
Until later,
Alan
Showing posts with label deficiency balance. Show all posts
Showing posts with label deficiency balance. Show all posts
Tuesday, September 4, 2007
Thursday, July 19, 2007
Bad Credit! No Credit!, Bankruptcy OK! Car Loans
Hi,
A relatively new gimmick seems to have taken the credit world by storm: No credit, bad credit, bankruptcies all OK. We guarantee that you will get a car loan, credit card, new furniture etc., Let's look at the scenario that unfolds when a person buys a car under these terms. All "normal" avenues of exploring the best car, the best price, the most favorable interest rates and the most suitable loan term are non-existent. When the borrower approaches the car dealer, he or she is forced to choose among a small inventory of cars, and are at the mercy of the car lots financial department. One of the common ways these car lots hide their excessive interest rates and finance charges is to offer terms 24-48 months longer than conventional car loans. The borrower might believe that the car payment quoted by the dealer isn't all that bad without stopping to realize that he or she is paying an extra $300.00 a month for an additional 36-48 months longer than if he or she had a conventional loan. Another thing missing from financial departments on car lots is the ability of banks and credit unions to work with the customer in the case of problems. In general, these types of car lots have a very short fuse when it comes to repossessing a car, and will do so immediately at the first sign of a problem. Unlike established financial institutions that handle auto loans, car lots will not be concerned at realizing maximum dollars for the sale of the borrower's vehicle, leaving an excessive deficiency balance. In many instances, especially for young people, getting involved in these types of high risk car loans will result in the borrower digging such a deep hole with his or her credit scores, that he or she may not be able to recover for many, many years to come, if at all. The reason these loans are available is that even though there will be a high delinquency rate, the excessive terms on the loans, higher interest rates, finance charges and close monitoring of the loans allows the car lot to still make a nice profit. The other factor in the dealer's profit is that the used cars being sold usually have an extremely high profit margin built into the price.
Until later,
Alan
A relatively new gimmick seems to have taken the credit world by storm: No credit, bad credit, bankruptcies all OK. We guarantee that you will get a car loan, credit card, new furniture etc., Let's look at the scenario that unfolds when a person buys a car under these terms. All "normal" avenues of exploring the best car, the best price, the most favorable interest rates and the most suitable loan term are non-existent. When the borrower approaches the car dealer, he or she is forced to choose among a small inventory of cars, and are at the mercy of the car lots financial department. One of the common ways these car lots hide their excessive interest rates and finance charges is to offer terms 24-48 months longer than conventional car loans. The borrower might believe that the car payment quoted by the dealer isn't all that bad without stopping to realize that he or she is paying an extra $300.00 a month for an additional 36-48 months longer than if he or she had a conventional loan. Another thing missing from financial departments on car lots is the ability of banks and credit unions to work with the customer in the case of problems. In general, these types of car lots have a very short fuse when it comes to repossessing a car, and will do so immediately at the first sign of a problem. Unlike established financial institutions that handle auto loans, car lots will not be concerned at realizing maximum dollars for the sale of the borrower's vehicle, leaving an excessive deficiency balance. In many instances, especially for young people, getting involved in these types of high risk car loans will result in the borrower digging such a deep hole with his or her credit scores, that he or she may not be able to recover for many, many years to come, if at all. The reason these loans are available is that even though there will be a high delinquency rate, the excessive terms on the loans, higher interest rates, finance charges and close monitoring of the loans allows the car lot to still make a nice profit. The other factor in the dealer's profit is that the used cars being sold usually have an extremely high profit margin built into the price.
Until later,
Alan
Thursday, March 22, 2007
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
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
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