Most customers who start missing their auto-loan installments are likely going through a very rough financial situation. Unless a car dealership (or an auto loan lender) acts fast, there is little hope of recouping the missed payments.
The involvement of a collection agency is a game-changer. Collection agencies are known to take recovery efforts to a completely different level. Their persistence, tactics, and incremental debt collection intensity ensures that your invoice becomes the debtor’s priority. All his other payment obligations become secondary.
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The biggest downside of waiting is that the asset’s value (car) depreciates if a lender or a car dealer waits too long. In other words, forget about getting the interest and late fees. If the lender waits too long, he may be unable to recover the principal amount.
A record 7 million Americans are three months behind on their car payments. Their non-payment could be because of the loss of regular income or mismanagement of personal finances. There could be other circumstances like a sudden medical emergency due to the borrower’s cash reserves being depleted or even a personal issue like divorce.
Americans who fall behind these payments are generally those with low credit ratings. Individuals with low credit scores often take sub-prime auto loans with high-interest rates. But many defaults are from customers who we thought were financially well off or those with a stellar credit history. Somehow they landed up buying a vehicle that was beyond their means.
Once a customer stops making payments, starts giving doubtful excuses, or starts to ignore your payment reminders, it is important to involve a debt collections agency quickly to resolve these accounts.
It is recommended to contact a collection agency if the last installment has been more than 60 days past due. The involvement of a collection agency is a game-changer. They are experts in collecting past-due debts. The longer you wait, the harder it will get to recover your money.
Before hiring a collection agency, check if it is licensed and bonded in those states where your debtors are located. The agency should have both Consumer and Commercial debt collection divisions. The same collection agency can pursue all situations if your debtor is a person or a business (ex: company lease).
The collection agency will approach the cosigner for payments if the primary signer cannot pay.
If a debtor ignores payment repeatedly, then his credit score and FICO score start to drop, and in many cases, his car can be repossessed (well, in most states).
A collection agency can even go to court and garnish wages each month from the debtor’s paycheck.
The average transaction price for light vehicles in the United States was $37,577 in December 2018 as per kbb.com. About 4.7% of auto loans and leases were over 90 days delinquent in early 2019.
Many analysts have been forecasting that an economic recession may not be too far off. Therefore it is advisable to act promptly.
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Check this page >> Cost of Hiring a Debt Collections Agency
If you are looking for a good collection agency, we can help you. Contact us if you are interested in finding out more.