Consumer Loan Collections (Intro to Consumer Loan Delinquency) Flashcards

1
Q

What defines a consumer loan as delinquent?

A

When repayment is not received on or before its due date.

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2
Q

What are common factors affecting consumer loan delinquency?

A

Lender-controlled and external factors.

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3
Q

What is a lender-controlled factor affecting delinquency rates?

A

Loan marketing philosophy and types of loans offered.

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4
Q

What is a general trend for delinquency rates of unsecured vs. secured loans?

A

Unsecured loans typically have higher delinquency rates.

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5
Q

Name some external factors that may affect delinquency rates.

A

Seasonal trends, economic conditions, job loss, illness.

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6
Q

Who are considered good-risk borrowers?

A

Those willing and able to repay with good credit ratings.

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7
Q

Who are fair-risk borrowers?

A

Those able but often unwilling to repay, needing reminders.

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8
Q

Who are poor-risk borrowers?

A

Those often unwilling or unable to repay, rarely responsive to collections.

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9
Q

What should a collection policy establish?

A

Procedures for prompt contact, courtesy, fairness, adaptability.

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10
Q

What is the goal of collection efforts?

A

To minimize lender losses while respecting borrower rights.

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11
Q

Why is timing of contact critical for delinquent borrowers?

A

Early contact reduces chance of default and asset depreciation.

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12
Q

What do fair lending laws require of lenders?

A

Standard of fairness and adherence to loan agreements.

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13
Q

When can collection staff waive late charges?

A

Under established, uniform conditions defined by policy.

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14
Q

What might a collection policy include for handling special cases?

A

Procedures for first-time delinquents and disaster relief.

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15
Q

What should be evaluated to maintain or lower delinquency rates?

A

Costs and benefits of collection methods.

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16
Q

What is a collection policy?

A

Guidelines for systematic, legal contact of delinquent borrowers.

17
Q

What is a consumer loan?

A

A loan for personal use, like for vehicles or education.

18
Q

What is the delinquency rate?

A

Percentage of loans in a portfolio that are delinquent.

19
Q

Define delinquent in the context of consumer loans.

A

Loan status when repayment isn’t received by due date.

20
Q

Who are fair-risk borrowers?

A

Borrowers able but unwilling to pay, needing reminders.

21
Q

Who are good-risk borrowers?

A

Borrowers willing and able to pay, with good credit.

22
Q

What is a grace period?

A

Days after due date where payment won’t harm credit.

23
Q

Who are poor-risk borrowers?

A

Borrowers often unwilling or unable to pay, not responsive.