Imagine if customers truly understood what life would be like without their car. What if, for just one day, they tracked every time they relied on itācommuting to work, running errands, picking up children, or attending appointments? For many, especially those in areas without reliable public transportation, losing a vehicle isnāt just an inconvenienceāitās a crisis.
Unfortunately, this reality often doesnāt sink in until itās too late. Thatās when the panic sets in, and customers scramble to gather last-minute funds to reclaim their vehicle. But at what cost?
Financial Education Before Itās Too LateĀ
By the time a customer steps onto a car lot, theyāve already decided they need a vehicle. But how many take the time to assess whether they can truly afford itānot just today, but if their financial situation changes? And how many have a backup plan if things go wrong?Ā
This is where financial education plays a crucial role. However, itās not just about providing resourcesāitās about delivering them in the way customers prefer to receive information. Some customers engage more with text messages, while others rely on emails, website portals, or even social media.
If financial education is buried in a letter, they never open or a website they rarely visit, its impact is lost.Ā
To be effective, education should be available through the channels customers actually use. Whether itās a welcome email, a text reminder, or an interactive tool on a lenderās website, these touchpoints ensure financial literacy reaches customers in a way that resonates with them.Ā
The Reality of RepossessionĀ
Customers often donāt realize the full financial and credit consequences of repossession. Walking them through the potential fallout can be eye-opening:Ā
- No car ā Losing reliable transportation can disrupt work, childcare, and daily responsibilities.Ā
- Repossession fees ā The lender may charge additional fees on top of missed payments.Ā
- Auction sale ā The vehicle may be sold for less than whatās owed.Ā
- Deficiency balance ā The customer may still owe the difference between the sale price and the remaining loan balance.Ā
- Negative credit impact ā A repossession can damage credit scores for years.Ā
- Future financing hurdles ā Even if the customer qualifies for another car loan, theyāll likely face higher interest rates.Ā
A Path to PreventionĀ
Repossession is a costly and stressful outcome for everyone involvedācustomers, lenders, and even communities. The best way to prevent it is through proactive financial education.Ā
A great starting point is the Office of the Comptroller of the Currencyās (OCC) Financial Literacy Resource Directory. These resources can help lenders, creditors, and even consumers build stronger financial foundationsābefore a crisis hits.Ā
When customers are empowered with knowledge, they can make better financial decisions, and that benefits everyone.
Because in the end, no one truly wins when a vehicle is repossessed.Ā
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Author: Bev Evancic
Bev.Evancic@ResourceManagement.com
Bev Evancic is a Senior Vice President at Resource Management Services, Inc.Ā Prior to employment at RMS, Bev worked as the Collection and Recovery Manager at AT&T Universal Card,Ā Citi,Ā and Federated Department Stores. Bev started in the collection industry as a collector at an upscale clothing store in Cincinnati, Ohio. As a returned check and private label credit card collector, Bev gained a basic understanding of the collection industry that has not changed with the introduction of regulations. Her collection philosophy begins with the idea that businesses and customersĀ benefitĀ from preserving the customer relationship. First, collectors need toĀ attemptĀ to contact customers when it is convenient for the customer to discuss his/her financial condition and willingness/ability to pay.Ā Second,Ā you never collect money by intimidating or threatening customers. Third, businesses must make sure the debt is valid.Ā
She has managed all phases of collection and recovery operations, including automatedĀ dialer units,Ā bankruptcy,Ā and legal units, skip tracing units, internal collections, outside collection agency networks, and Consumer Credit Counseling. As a Consultant for ResourceĀ Management Services, Inc., Bev has spearheaded collection and recovery best practices reviews for many top credit grantors. Her articles on dialer operations, agency management and bankruptcy best practices have been widely publicized.Ā
She is well known and regarded as a specialty expert in the areas of: Repossession, Bankruptcy, Estate, Litigation, as well as Pre- and Post- Charge-off.Ā Prior to joining Resource Management Services, Inc. in 1995, Bev managed the Recovery Department for AT&T Universal Card Services where she developed the bankruptcy, probate, internal and litigation processes.Ā
She is the author of āRecovery Management: Collecting the Uncollectible Account.
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From comprehensive consulting services to specialized training programs and meticulous oversight of third-party vendors, we offer a comprehensive suite of services designed to empower your team and optimize your compliance strategies.Ā
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