A record 7 million Americans are 3 months behind on their car payments. This could be because of loss of regular income or mismanagement of personal finances. There could be other circumstances like a sudden medical emergency due to which borrower’s cash reserves have depleted or even a personal situation like divorce.
Americans who fall behind these payments are generally those with low credit rating and had to turn to sub-prime auto loans with high interest rates. But increasingly we are experiencing defaults from customers who we thought were financially well off with a stellar credit history, but landed up buying a vehicle which was beyond their means.
Once a customer stops making payments or has starts to give doubtful excuses, even starts to ignore your payment reminders then it may be a high time to involve a debt collections agency for resolving these accounts.
It is recommended to contact a collection agency if the last installment has been more than 30-60 days past due. Involvement of a collection agency is a game changer, they are experts in collecting debt. The longer you wait, harder it will get to recover your money.
Before you hire a collection agency, check if it is licensed and bonded in those states where your debtors are located. The agency should preferably have both Consumer and Commercial debt collection divisions, therefore even if your debtor is an individual person or a business (ex: company lease), the same collection agency can pursue all the matters.
If the main signer cannot pay, the collection agency will approach cosigner for payments.
If a debtor ignores payment repeatedly then his credit score and FICO score starts to drop and in many cases his car may be repossessed (in most states). A collection agency can even go to the court and garnish wages each month from the debtor’s paycheck.
The biggest downside of waiting is that the value of the asset (car) depreciates if a lender or a car dealer waits longer. Forget about getting the interest and late fees, if the lender waits too long he may not even be able to recover the principal amount.
Average transaction price for light vehicles in the United States was $37,577 in December 2018 as per kbb.com. About 4.7 percent of auto loans and leases were over 90 days delinquent in early 2019.
Many analysts are forecasting that an economic recession may be 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