Instead of paying his collision repair bill in full, this customer wants to pay it out in installments of $100 a month…

…What would you do?

The following comes from a collision shop in Central California. This shop is located in a small town where almost everyone knows one another.
The shop says:

“A repeat customer had his Mustang convertible towed into our collision shop. The insurance company approved the $5,765 estimate. We informed the customer that he had a $2,000 deductible, and he approved the repairs.

“After the repairs were completed, the customer came by and gave us $100.

“He told us he could give us $100 a month. We talked about financing and borrowing from friends or relatives, but our customer said he wouldn’t qualify for a loan and he didn’t have anyone who could loan the money.

“We still have the vehicle, but we really don’t want to keep it for two years while he is making payments.”
What would you do?

JEANNE SILVER

Jeanne Silver, co-owner, CARSTAR Mundelein, Mundelein, Ill.:

“This is always a difficult situation, but more so when it happens with a repeat customer. However, business is business.
“First hard and uncontested rule, get a signed repair authorization. The form should have the vehicle owner assume responsibility for payment and accept a mechanic’s lien in case of nonpayment. If the shop does not have one in place, it’s worth getting one done with some legal help.

“The second, and most obvious, thing to do is not release the vehicle. Sometimes, not having one’s car serves as an incentive to ‘find the money.’

“Don’t ever finance deductibles or other customer pays. In the case of a deductible in excess of $1,000, it might be appropriate to ask for half up front. This will help you discover if your customer is capable of paying or not. By asking for a deposit, it will vet the owner’s ability to pay his or her portion of the repair.

“It’s not unreasonable to ask the vehicle owner to gather the deductible in advance of repair, and then it may be held until repairs are complete. In this case, it may delay repair, but remember that you don’t lose money on work you don’t do.

“We recently had a customer who’s employed by a finance company that works with people who have bad credit. The transaction is moved from the shop to the finance company, and it may be a viable alternative. You may want to suggest this to the vehicle owner.

“The last scenario, and the least desirable, is to assume the lien and sell the car. If the car is financed by a lien holder, you may want to let the lien holder know that the vehicle is in your possession and will not be released until the deductible is paid. A lien holder would normally want to repossess the car in case of nonpayment of the loan.

“We did experience this situation. We researched the process of repossession in our state and contacted the owner by certified letter, as well as the lien holder. The owner never responded, and the lien holder abandoned the car. We did not repair it until an abandoned title was issued. We’ve now repaired and resold the car. It was not a simple or quick process. This is a very last resort and should be done only after discussion with an attorney and/or your Department of Motor Vehicles.

“Laws vary from state to state, and ours deals harshly with those who write bad checks. However, the re-title of an abandoned vehicle is a long and arduous process. It’s never a comfortable situation, and it’s one that, fortunately, doesn’t happen too often. Just remember, it’s business. And despite any relationship with the customer, it has to be treated as such. Good luck!”

BRYAN WELSH

Bryan Welsh, Artistic Collision Center, Rancho Cordova, Calif.:

“From the very beginning, I would have confirmed with the customer that he was aware of his $2,000 deductible and that this amount would need to be paid in full on completion of the repairs. A deductible of that amount is not typical of what we normally see, so I would certainly make sure that the customer had the means to satisfy it.

“We will not release a vehicle unless all methods of payment, less any pending supplements, have been received. That being said, I certainly would not release this vehicle to the customer until he had the finances to take care of his obligation. If he only has the ability to muster $100 a month, I guarantee that you’ll be chasing the money indefinitely.
“This is certainly not a situation I would want to be in, but I’d have taken the steps prior to completion of repairs to ensure I was not in this pickle.”

What T.J. Reilly would have done

This is a tough situation, especially in a small town. You don’t want to appear to be insensitive, but at the same time you don’t want the liability of storing the vehicle or giving up the space it will be taking up.

I believe there are some things that should have happened before the repair took place. In my shop, I have a stand-up sign on our front counter that reads: “We would be happy to store your vehicle for only $25 a day after your repairs are completed.” I’ve seen other shops add similar verbiage to the estimate that the customer signs. If you did have a posted notice to this effect, then you could give the customer another 30 days to come up with cash before you began charging storage fees.

I don’t think taking a mechanics lien on this vehicle would be a wise option. More than likely this customer will probably come up with the rest of the money, at least before next summer.
The other risk is that this customer might come and take the car before it’s paid off. In most states, you can’t enforce a mechanics lien if the customer is in possession of the vehicle. You would need to know your rights in the state in which you do business. Because of this, I would move the vehicle to a secure location or disable it so the customer couldn’t drive off with it.