Applied Methods and Techniques Flashcards

A $20,000 loan has a monthly rate of 1%. Approximately how much of the first payment is interest?

Answer: $200

First-month interest = $20,000 × 1% = $200.

What is the most effective technique for opening a collection call with a delinquent customer?

Answer: Verify identity, give required disclosures, then ask for full payment and the reason for delinquency

Identity verification and disclosures protect privacy and compliance, and asking for full payment sets the right anchor.

Under most state laws, a self-help repossession is permitted only if it is done without what?

Answer: A breach of the peace

UCC Article 9 allows self-help repossession only without a breach of the peace.

After repossession, what notice must a secured creditor generally send before selling the collateral?

Answer: Notice of the intended disposition (sale) of the collateral

UCC Article 9 requires reasonable authenticated notice before disposition of repossessed collateral.

Which approach best helps a collector set a realistic promise-to-pay?

Answer: Ask for a specific amount on a specific date the customer confirms is affordable

Specific, affordable, date-certain promises are more likely to be kept and are easy to track.

A borrower is $1,500 behind but can only pay $500 now. Which tool may address the shortfall while keeping the account active, subject to policy?

Answer: A payment extension or deferment

Extensions or deferments move missed payments to the end of the term to cure delinquency under policy.

Which metric measures the share of accounts that move from one delinquency bucket to a worse one in a period?

Answer: Roll rate

Roll rates track migration of balances or accounts into more severe delinquency stages.