The Consumer Financial Protection Bureau (CFPB) recently reported significant issues in auto loan servicing that can serve as a cautionary tale for Buy Here Pay Here (BHPH) dealers. Understanding these pitfalls, implementing best practices, and partnering with a finance and accounting software tool for car dealerships like Deal Pack, can help BHPH dealers avoid loan servicing legal troubles while maintaining a positive relationship with your customers.

Key Issues Identified by the CFPB

1. Mishandling of Final Payments
   • Issue: Auto loan servicers were found to mishandle final payments, causing incorrect balance calculations and overcharging customers.
   • Solution: Ensure that your payment processing systems are accurate and up to date. Regularly audit your accounts to verify that final payments are correctly applied and communicated to the customer.
2. Inadequate Communication
   • Issue: Lack of clear communication about payoff amounts and procedures led to confusion and frustration for customers.
   • Solution: Provide transparent and straightforward communication regarding loan balances and payoff procedures. Use automated systems to send regular updates and reminders to your customers.
3. Failure to Process Payments Promptly
   • Issue: Delays in processing payments resulted in unnecessary late fees and negative credit reporting.
   • Solution: Implement an efficient payment processing system that quickly applies payments to accounts. Ensure your team is trained to handle payment processing promptly and accurately.

Best Practices for BHPH Dealers

1. Invest in Reliable Dealer Management Software (DMS)
   • Deal Pack can help you manage payments, track customer interactions, and ensure compliance with financial regulations. Look for features like automated payment reminders, real-time account updates, and comprehensive reporting tools.
2. Train Your Staff on Compliance and Customer Service
   • Regular training sessions on compliance requirements and customer service best practices can help your team avoid common pitfalls. Make sure your staff understands the importance of accurate record-keeping and transparent communication.
3. Conduct Regular Audits
   • Regular audits of your accounts and processes can help identify and rectify any issues before they escalate. Use audit results to improve your systems and prevent future problems.
4. Enhance Communication Channels
   • Utilize multiple communication channels, such as email, SMS, and phone calls, to keep customers informed about their accounts. Clear and consistent communication can prevent misunderstandings and build trust with your customers.

By addressing the issues highlighted in the CFPB report and implementing best practices, BHPH dealers can avoid legal trouble and enhance their customer service. Investing in robust software, training your staff, and maintaining transparent communication are key steps to ensure compliance and foster positive customer relationships.

By partnering with Deal Pack, your dealership can avoid all common pitfalls outlined by the CFPB. To learn more, call Customer Support at 1-800-526-5832.

For more detailed information on the CFPB’s findings, you can read the full report here.