If you think threatening phone calls can spoil your whole day, consider how you would feel if you walked out one day only to find your car had vanished. The first thing you might think is that it had been stolen. But if you had missed a payment on your auto loan, the odds are that it was repossessed.
How can a lender repossess a car?
When you finance the purchase of an automobile this is called a secured loan. In other words, the car is collateral that secures the loan. If you default on your contract or miss payments, the lender can take it back (repossess it). The lender doesn’t even have to notify you that your car is about to be repossessed. You might have read stories or seen movies where a guy shows up with a truck in the middle of the night and repossesses a car–and this is what can actually happen.
What happens after your car is repossessed
Your lender may be able to “accelerate,” which it when it requires you to pay off the whole balance of the loan if you want to get your vehicle back. Alternately, the lender can sell the repossessed vehicle or auction it off. If the lender sells the car for less than you owed on it, you can be sued for the difference between what the car was sold for and what you owed on it. This is called a deficiency and is true even in what is called a voluntary car repossession.
Know your rights
If you think you will miss a payment or more on your car, it’s important for you to know your rights. You will find them on your security agreement, a document you were required to sign when you got the loan. The lender will give this document to your Department of Motor Vehicles to put a lien on your car. The document will set out the lien holder’s rights and your rights. So, it’s important to find that document that you signed when you got the loan. If you can’t find it, be sure to request that your lender (lienholder) provide a copy and do read it very carefully. The companies that lend money on automobiles spend a lot of money on lawyers to make sure that their contracts are legal so that you can’t void the loan because of faulty paperwork.
Decide how much you can afford
Before you sign off on a loan to buy that gorgeous new automobile, make sure that you can afford the payments and that you will have room left over to live. Think about this and decide what you could afford to pay each week or month before you talk to the seller. You may be pressured to pay more but don’t give in. No matter how beautiful the car might be, it’s not worth getting in trouble later and seeing it get repossessed.
Talk to the lender
If you believe you are going to be late with a payment, make sure you call your lender and make an attempt to work things out. If your lender does agree that you can delay the payment or modify the contract, make sure you get the agreement in writing.
Talk to us
If you’re having such a struggle with debt you’re afraid your car might be repossessed, you should talk to us about debt relief. This is where you contract with us to handle your debts by negotiating with your creditors for you. We usually save our customers thousands of dollars, along with a lot of stress and sleepless nights.