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

The Evolution of the Credit Department

Hi,
Credit departments have changed dramatically over the last thirty five years. In the past, credit department employees checked and assessed all aspects of credit requests and dealt with each request on an individual basis. The result of this hands on approach was that credit was only extended to people who could genuinely afford it. As a result, the number of delinquencies, charge-offs and repossessions was very low. Due to the human verification process, it was rare that information on credit applications was falsified. Computer technology redefined how credit departments work and how credit is granted. By using computers to compile statistical data, creditors have established various formulas with which to generically grant credit. These actions have caused a multitude of problems in the credit field. It has allowed unscrupulous borrowers to obtain credit that they can ill afford and in some cases, have no intention to repay. One of the other negative effects of this generic approach to credit is that many times people unknowingly obtain more credit than they can afford to repay, and which in some instances results in financial chaos. To cover the cost of these indiscretions, the credit industry has used higher interests, finance charges, late fees, etc., Tomorrow I will talk about various structures of credit departments.
Until then,
Alan