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7 Things You Need to Know About Auto Repossession



Your lender has the right to hire a recovery company to repossess your vehicle if something goes awry with your auto loan, such as a default. After it’s been recovered, it’s usually prepared for an auction, and the proceeds from the car’s sale is put toward your auto loan balance. Whether you’re facing a repo, or your vehicle has already been recovered, there are many things you should know so you can navigate the process as painlessly as possible.

1. When Can My Car Be Repossessed?

7 Things You Need to Know About Vehicle RepossessionIn some cases, your car can be repossessed as soon as you miss one payment – it all depends on the language in your auto loan contract. In many states, your vehicle can be recovered when your full coverage car insurance lapses, too. The recovery company can take your vehicle while you’re working, shopping, or simply at home. If your car is out in the open, it can be towed away by the repo man.

Your lender isn’t required to give you any notice that your vehicle is going to be repossessed, depending on the state you live in. But you may have received a notice about late or missed payments and an impending repossession.

However, in most states, they must send you notices after they recover the car. If your vehicle has already been taken, the notice needs to include information about when and where your car is going to be sold at auction, since you have the right to bid on it.

Some states have created rules on what creditors and can and can’t do during the COVID-19 pandemic. Your state may not allow a lender to repossess your vehicle during the pandemic, so check with National Consumer Law Center (NCLC) to see how your state is handling car repossessions currently.

2. Can I Hide My Vehicle?

It may be tempting to try to hide your vehicle from the recovery company, but it’s just delaying the inevitable. One way or another, the lender can find a way to recover the car if you break the loan contract or default on the loan. One of the only places a recovery company can’t recover your vehicle is when it’s in a locked garage or unit, since this is considered breaching the peace and is breaking and entering. However, anywhere else is fair game.

Experienced recovery companies know to look in specific areas where a borrower may hide their car, such as nearby parking lots or local grocery stories. They usually get your address, and often, where you work. Using the vehicle identification number (VIN) unique to your car, make, model, color, and year, they can verify that it’s yours and tow it away. Some vehicles come equipped with GPS tracking systems, and they could find your car that way – so hiding it isn’t likely to work.

If you do manage to successfully hide your vehicle from the recovery company and they fail to repo it, the lender can stop paying the recovery company and take you to court. If they win, they can get a court order and get it that way. If they still can’t recover the car, they could take you to court and get an order to garnish your wages for the loan balance.

3. Surrendering vs. Waiting for the Repo Man

If you know that you’re about to face a repossession, you have the option to voluntarily surrender it instead of waiting for the recovery company to come.

While giving up your vehicle doesn’t seem like the best option, it can actually save you money and hassle. Since the repo company can take your car while you’re out and about, you can choose to drop off the vehicle at the dealership when it’s most convenient for you. You can also take the time to remove any personal belongings.

Surrendering your car to the lender can save you money because if the lender has to hire a recovery company, you’re responsible for footing that bill – not the lender. The cost of a recovery company can be anywhere around $75 to $300.

4. Paying the Deficiency Balance

Once a vehicle is repossessed, it’s usually prepared to be sold at auction. If it sells, the proceeds from the auction are put toward your remaining loan balance. However, auction proceeds may not be enough to cover the entire balance – whatever’s left is called the deficiency balance.

You’re responsible for paying that deficiency balance. Even though the car is sold, you’re still responsible for the loan. Some lenders allow their borrowers to set up payment plans or arrangements to pay for the balance, but you may be required to pay for the whole balance with one lump sum. What you can arrange depends on your loan contract, your financial situation, and what your lender can do for you.

For some, the deficiency balance is too large to pay for, and in some cases, they opt for bankruptcy. Filing for bankruptcy is a big decision that can have years of repercussions on your credit reports, so we recommend that you talk to a bankruptcy or legal expert before making a decision to file for bankruptcy for repossession deficiency balance.

5. Your Credit After a Repo

After a repossession, your credit score is typically harmed quite a bit. For some, it could mean a drop of around 100 points or more in your credit score. Not to mention, if you defaulted on your auto loan and it leads to a repossession, any missed or late payments, as well as the repossession itself, can also harm your credit.

The good news is that time heals your credit reports and score. A repo can remain on your credit reports for up to seven years. With each passing year, though, the impact of it lessens.

Taking on new credit and making all of your payments on time is a great way to begin the bounce back after a repo. Keeping your credit card balances below 30%, staying on top of all your bills is a great way to improve your credit, too.

6. Avoiding a Repossession in the Future

The best ways to avoid a repossession is to make all of your payments on time and make sure your car insurance doesn’t lapse.

If you fall into a tough financial situation, tell your lender! Odds are, they don’t want to go through the repossession process, either. Some auto lenders offer deferment plans for borrowers that are struggling with unemployment, or unexpected emergencies like medical bills or temporary disability.

The moment you think you may miss a payment, contact your lender and keep them in the loop. The quicker you act, the more options you may have to avoid a repossession.

7. Getting Another Car After Repossession

Most traditional car lenders may not be willing to approve a borrower with a repossession on their credit reports. Subprime lenders, also known as bad credit lenders, may not assist borrowers with a repo that happened less than a year ago. However, some in-house financing dealerships don’t do credit checks, so a recent repo wouldn’t get in the way of auto financing if you pursue those dealers.

Subprime car lenders are signed up with special finance dealerships, and they’re equipped to assist borrowers in difficult credit situations, such as a past repossession. Here at Auto Credit Express, we match borrowers to dealers near them with bad credit lending options. To start the process of getting back on the road, fill out our free auto loan request form. We’ll look for a dealership in your local area!

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Bad Credit

If You Want Consumers to Lose, Network Regulation is a Must – Digital Transactions



After the current U.S. Congress was sworn in, a predictable chorus of merchants, lobbyists, and lawmakers demanded new interchange price caps and other government mandates to decrease credit card interchange fees for merchants. The tired attacks on credit cards are an easy narrative that focuses almost exclusively on the cost side of the ledger, while completely ignoring the cards’ important role in the economy and the regressive effects of interchange regulation. 

To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents. For decades, they have promised these interventions would eventually benefit consumers. But the lessons from the Durbin Amendment in the United States and price cap regulation in Australia is clear. Although some policymakers bemoan the current economic model, arbitrarily “cutting” rates for the sake of cuts completely ignores the economic reality that as billions of dollars move to merchants, billions are lost by consumers. 

For the uninitiated, let’s break down what credit interchange funds: 1) the cost of fraud; 2) more than $40 billion in consumers rewards; 3) the cost of nonpayment by consumers, which is typically 4% of revolving credit; 4) more than $300 billion in credit floats to U.S. consumers; and 5) drastically higher “ticket lift” for merchants. 

Johnson: “To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents.”

These are just some of the benefits. If costs were all that mattered, American Express wouldn’t exist. Until recently, it was by far the most expensive U.S. network. Yet, merchants still took AmEx because they knew the average AmEx “swipe” was around $140, far more than Visa and Mastercard. 

Put simply, for a few basis points, interchange functions as a small insurance policy to safeguard retailers from the threat of fraud and nonpayment by consumers. Consider the amount of ink spilled on interchange when no one mentions that the chargeoff rate for issuing banks on bad credit card debt exceeds credit interchange.

Looking abroad, interchange opponents cite Australia, which halved interchange fees nearly 20 years ago, as a glowing example of how to regulate credit cards. In truth, Australia’s regulations have harmed consumers, reduced their options, and forced Australians to pay more for less appealing credit card products. 

First, the cost of a basic credit card is $60 USD in many Australian banks. How many millions of Americans would lose access to credit if the annual cost went from $0 to $60? Can you imagine the consumer outrage? 

In a two-sided market like credit cards, any regulated shift to one side acts a massive tax on the other. For Australians, the new tax fell on cardholders. There, annual fees for standard cards rose by nearly 25%, according to an analysis by global consulting firm CRA International. Fees for rewards cards skyrocketed by as much as 77%.

Many no-fee credit cards were no longer financially viable. As a result, they were pulled from the market, leaving lower income Australians, as well as young people working to establish credit, with few viable options in the credit card market.

Even the benefits that lead many people to sign up for credit cards in the first place have been substantially diluted in Australia because of the reduction of interchange fees. In fact, the value of rewards points fell by approximately 23% after the country cut interchange fees.

Efforts to add interchange price caps would have a similar effect here in the U.S. A 50% cut would amount to a $40 billion to $50 billion wealth transfer from consumers and issuers to merchants. For the 20 million or so financially marginalized Americans, what will their access to credit be when issuers find a $50 billion hole in their balance sheets? 

The average American generates $167 per year in rewards, according to the Consumer Financial Protection Bureau. Perks like airline miles, hotel points, and cashback rewards would be decimated and would likely be just the province of the rich after regulation. Many middle-class consumers could say goodbye to family vacations booked at almost no cost thanks to credit card rewards.

As the travel industry and retailers fight to bounce back from the impact of the pandemic, slashing consumer rewards and reducing the attractiveness of already-fragile businesses is the last thing lawmakers and regulators in Washington should undertake.

Proposals to follow Australia’s misguided lead in capping interchange may allow retailers to snatch a few extra basis points, but the consequences would be disastrous for consumers. Cards would simply be less valuable and more expensive for Americans, and millions of consumers would lose access to credit. University of Pennsylvania Professor Natasha Sarin estimates debit price caps alone cost consumers $3 billion. How much more would consumers have to pay under Durbin 2.0?

Members of Congress and other leaders should learn from Australia and Durbin 1.0 to avoid making the same mistake twice.

—Drew Johnson is a senior fellow at the National Center for Public Policy Research, Washington, D.C.

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Increase Your Credit Score With Michael Carrington



More than ever before, your debt and credit records can negatively impact you or your family’s life if left unmanaged. Sadly, many Americans feel entirely helpless about their credit score’s present state and the steps they need to take to fix a less-than-perfect score. This is where Michael Carrington, founder of Tier 1 Credit Specialist, comes in. Michael is determined to offer thousands of Americans an educated, informed approach towards credit restoration.

Michael understands the plight that having a bad credit score can bring into your life. His first financial industry job was working as a home mortgage loan analyst for one of the nation’s largest lenders. Early on, he had to work a grueling schedule which included several jobs seven days a week while putting in almost 12-hour days to make $5,000 monthly to get by barely.

“I was tired of living a mediocre life and was determined to increase the value that I can offer others through my knowledge of the finance industry – I started reading all of the necessary books, networking with industry professionals, and investing in mentorship,” shares Michael Carrington. “I got my break when I was able to grow a seven-figure credit repair and funding organization that is flexible enough to address the financial needs of thousands of Americans.”

With his vast experience in the business world, establishing himself as a well-respected business leader, Michael Carrington felt he had the power to help millions of Americas in restoring their credit. Michael learned the FICO system, stayed up to date on the Fair Credit Reporting Act (FCRA), found ways to improve his credit score, and started showing others.

The Tier 1 Credit Specialist uses a tested and proven approach to educate their clients on everything credit scores. Michael is leveraging his experience as a home mortgage professional, marketing executive, and global business coach to inform his clients. He and his team take their time to carefully go through their client’s credit records as they try to find the root of their problem and find suitable financial solutions.

The company is changing lives all over America as it helps families and individuals to repair their credit scores, gain access to lower interest rates on loans and get better jobs. What Tier 1 Credit Specialists is offering many Americans is a chance at financial freedom.

Michael Carrington has repaired over $8 million in debt write-ups and has helped fund American’s with over $4 million through thousands of fixed reports. “I credit our success to being people-focused,” he often says. “The amount of success that we create is going to be in direct proportion to the amount of value that we provide people – not just our customers – people.”

Because of its ‘people-focused goals, the Tier 1 Credit Specialist is determined to help millions of Americans achieve financial literacy. It is currently receiving raving reviews from clients who are completely happy with the credit repair solutions that the company has provided them.

Today, Michael Carrington is continuing with a new initiative to serve more Americans who suffer from bad credit due to little or no access to affordable resources for repair.

The Tier 1 Credit Socialist brand is changing the outlook of many families across America. To do this, the company has created an affiliate system that will provide more people with ways of earning during these tough economic times.

As a well-respected international business leader and entrepreneur with numerous achievements to his name Michael Carrington aims to help millions of Americans achieve the financial freedom, he is experiencing today. Tier 1 Credit Socialist is one of the most effective credit repair brands on the market right now, and they have no plans for slowing down in 2021!

Learn more about Michael Carrington by visiting his Instagram account or checking out the Tier 1 Credit Specialist website.

Published April 17th, 2021

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Does Having a Bank Account With an Issuer Make Credit Card Approval Easier?



Better the risk you know than the one you don’t.

When it comes to personal finance, nothing is guaranteed. That goes double for credit. That’s why, no matter how perfect your credit or how many times you’ve applied for a new credit card, there’s always that moment of doubt while you wait for a decision.

Issuing banks look at a wide range of factors when making a decision — and your credit score is only one of them. They look at your entire credit history, and consider things like your income and even your history with the bank itself.

For example, if you defaulted on a credit card with a given bank 15 years ago, that mistake is likely long gone from your credit reports. To you and the three major credit bureaus, it is ancient history. But banks are like elephants — they never forget. And that mistake could be enough to stop your approval.

But does it go the other way, too? Does having a bank account that’s in good standing with an issuer make you more likely to get approved? While there’s no clear-cut answer, there are a few cases when it could help.

A good relationship may weigh in your favor

Credit card issuers rarely come right out and say much about their approval processes, so we often have to rely on anecdotal evidence to get an idea of what works. That said, you can find a number of stories of folks who have been approved for a credit card they were previously denied for after they opened a savings or checking account with the issuer.

These types of stories are more common at the extreme ends of the card range. If you have a borderline bad credit score, for instance, having a long, positive banking history with the issuer — like no overdrafts or other problems — may weigh in your favor when applying for a credit card. That’s because the bank is able to see that you have regular income and don’t overspend.

Similarly, a healthy savings or investment account with a bank could be a helpful factor when applying for a high-end rewards credit card. This allows the bank to see that you can afford its product and that you have the type of funds required to put some serious spend on it.

Having a good banking relationship with an issuer can be particularly helpful when the economy is questionable and banks are tightening their proverbial pursestrings. When trying to minimize risk, going with applicants you’ve known for years simply makes more sense than starting fresh with a stranger.

Some banks provide targeted offers

Another way having a previous banking relationship with an issuer can help is when you can receive targeted credit card offers. These are sort of like invitations to apply for a card that the bank thinks will be a good fit for you. While approval for targeted offers is still not guaranteed, some types of targeted offers can be almost as good.

For example, the only confirmed way to get around Chase’s 5/24 rule (which is that any card application will be automatically denied if you’ve opened five or more cards in the last 24 months) is to receive a special “just for you” offer through your online Chase account. When these offers show up — they’re marked with a special black star — they will generally lead to an approval, no matter what your current 5/24 status.

Credit unions require membership

For the most part, you aren’t usually required to have a bank account with a particular issuer to get a credit card with that bank. However, there is one big exception: credit unions. Due to the different structure of a credit union vs. a bank, credit unions only offer their products to current members of the credit union.

To become a member, you need to actually have a stake in that credit union. In most cases, this is done by opening a savings account and maintaining a small balance — $5 is a common minimum.

You can only apply for a credit union credit card once you’ve joined, so a bank account is an actual requirement in this case. That said, your chances of being approved once you’re a member aren’t necessarily impacted by how much money you have in the account.

In general, while having a bank account with an issuer may be helpful in some cases, it’s not a cure-all for bad credit. Your credit history will always have more impact than your banking history when it comes to getting approved for a credit card.

For more information on bad credit, check out our guide to learn how to rebuild your credit.

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