Collector - May 2017 - 12
COLLECTIONTIPS Car Wash How to help consumers resolve their auto loan debt. By Anne Rosso May T 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 magazine. 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 12 ACAINTERNATIONAL.ORG