Auto loan servicing: What you should know
Quick insights
- Auto loan servicing involves the process of setting up your account and managing the payments, billing statements and credit reporting that goes into auto loans.
- Your auto loan service provider can be a helpful point of contact if you have questions or issues around your loan.
- Auto loan service providers include major banks and credit unions, which often work with other important players such as credit bureaus and regulatory bodies.
Have you been recently approved for an auto loan? You may now be wondering how these types of loans are managed. That’s where auto loan servicing comes in. Let’s take a closer look below.
What is auto loan servicing?
Auto loan servicing is the management and administration of auto loan accounts from the time the loan has been issued to you until the time it’s been paid off. This includes services such as collecting payments, managing account inquiries and handling other administrative aspects of an auto loan. These services are typically performed by banks, credit unions and auto finance companies. Understanding how auto loan servicing works can help you better understand how your auto loan works and make sure you stay on track with your monthly car payments.
How does auto loan servicing work?
Before auto loan servicing begins you must be approved for the loan and agree to the terms, this is called auto loan origination (or the issuing of the loan to you). An auto loan servicer will then assist you with account set up. This includes payment processing and billing (such as setting up and managing electronic/automatic or manual payments). An auto loan service provider will send you billing statements and may assist with account management, such as answering common questions and assisting with any complications that may arise.Â
Auto loan servicers also handle credit reporting to the major credit bureaus—Experianâ„¢, Equifax® and TransUnion®. This includes reporting any delinquencies and defaults and alerting the borrower of the consequences. For example, if you miss your payments, your auto loan service provider is responsible for sending you notifications, penalties, fees and documentation for potential repossession.Â
Once your loan has been paid off, auto loan servicing also helps with closing the account.Â
Key players in auto loan servicing
Major auto loan servicers, such as Chase Auto Servicing, other banks and credit unions are the primary institutions involved in auto loan servicing. Because your credit activity gets reported, credit bureaus are also involved by keeping your credit score up to date. Finally, regulatory bodies are also engaged to help oversee auto loan servicing practices.
Conclusion
Understanding how auto loan servicing works can be helpful when it comes to managing your auto loan. Your auto loan service provider can help assist with questions or issues you might have, from account setup to making payments. The provider can be a helpful point of contact and a way you receive communications around your auto loan.
