Collector - May 2017 - 12
How to help consumers resolve their auto loan debt.
By Anne Rosso May
he day you get the keys to a new (or
new-to-you) car is exciting; the day
you realize you owe more on the car
than you can afford, however, is significantly
less thrilling. It's a common and often
stressful situation. That's why when working
with consumers on auto deficiency accounts,
you must be prepared to educate them on
the financing process while keeping the
conversation positive and helpful.
Generally, consumers opt to pay their
credit card and mortgage bills before their
auto loans, which can mean that their
finances are already pretty strained. By the
time you're speaking to them, typically their
car has already been repossessed or they
are otherwise well aware they have missed
payments on it.
But there are other potential scenarios,
too. Maybe the consumer was in an accident
and didn't realize that the insurance
company didn't cover the entire amount due,
or maybe the consumer's lease ended but
there were still outstanding fees.
term. Turning the car in before the end of
the lease (whether voluntarily or through
repossession) may leave the consumer on
the hook for certain charges, such as the
remaining lease balance and excess wearand-tear costs.
But even turning the car in on time with
no outstanding balance doesn't guarantee the
consumer won't owe for other fees, such as
tickets or repairs.
Some states, such as Rhode Island and
Virginia, charge vehicle property taxes in
addition to sales taxes. Receiving this bill
in the mail, sometimes months after the car
has been sold or the lease has ended, baffles
many consumers, who may think it's a trick
or scam. The county issuing the tax bill may
not be obligated to notify buyers of the tax,
which adds to consumers' confusion.
REPOSSESSIONS AND AUCTIONS
Even when a vehicle is repossessed after
a default, consumers will likely still owe
money on it. The lender will sell the car at
an auction and that profit-which is usually
less than what the consumer believes
the car is worth-will be applied to the
total amount owed. If it doesn't cover the
outstanding loan balance, the consumer
will have to cover the deficiency.
But there may be other costs included in
the balance the consumer hasn't thought of,
such as repossession, storage and auction
fees. Be prepared to explain the repossession
and auction process to help borrowers
understand why they owe the debt.
Of course, customer service skills play a
big part in the debt collection process. In
all your attempts to engage the consumer
and collect the debt, be conscious of the
fact that dealerships want repeat buyers. Be
polite, friendly and helpful when assisting
consumers in resolving their past due debt.
Anne Rosso May is editor of Collector
LOANS, LEASES AND TAXES
Auto financing can be difficult for
consumers to understand. They may be
confused about how the loan process works,
especially if they are not the primary loan
holder. Auto loans often have cosigners,
and consumers may not understand that
cosigners are legally obligated to pay the
loan in full if the original borrower defaults.
Leasing a vehicle, which consumers
may think is more straightforward than
purchasing one, comes with its own
complications. Consumers who drive
more than the agreed-upon mileage may
owe more than they expect at the end of