Consumer Loan Collections (Intro to Consumer Loan Delinquency) Flashcards
What defines a consumer loan as delinquent?
When repayment is not received on or before its due date.
What are common factors affecting consumer loan delinquency?
Lender-controlled and external factors.
What is a lender-controlled factor affecting delinquency rates?
Loan marketing philosophy and types of loans offered.
What is a general trend for delinquency rates of unsecured vs. secured loans?
Unsecured loans typically have higher delinquency rates.
Name some external factors that may affect delinquency rates.
Seasonal trends, economic conditions, job loss, illness.
Who are considered good-risk borrowers?
Those willing and able to repay with good credit ratings.
Who are fair-risk borrowers?
Those able but often unwilling to repay, needing reminders.
Who are poor-risk borrowers?
Those often unwilling or unable to repay, rarely responsive to collections.
What should a collection policy establish?
Procedures for prompt contact, courtesy, fairness, adaptability.
What is the goal of collection efforts?
To minimize lender losses while respecting borrower rights.
Why is timing of contact critical for delinquent borrowers?
Early contact reduces chance of default and asset depreciation.
What do fair lending laws require of lenders?
Standard of fairness and adherence to loan agreements.
When can collection staff waive late charges?
Under established, uniform conditions defined by policy.
What might a collection policy include for handling special cases?
Procedures for first-time delinquents and disaster relief.
What should be evaluated to maintain or lower delinquency rates?
Costs and benefits of collection methods.
What is a collection policy?
Guidelines for systematic, legal contact of delinquent borrowers.
What is a consumer loan?
A loan for personal use, like for vehicles or education.
What is the delinquency rate?
Percentage of loans in a portfolio that are delinquent.
Define delinquent in the context of consumer loans.
Loan status when repayment isn’t received by due date.
Who are fair-risk borrowers?
Borrowers able but unwilling to pay, needing reminders.
Who are good-risk borrowers?
Borrowers willing and able to pay, with good credit.
What is a grace period?
Days after due date where payment won’t harm credit.
Who are poor-risk borrowers?
Borrowers often unwilling or unable to pay, not responsive.
