Avoiding Truck Repossession

Many of the best things you can do to avoid truck repossession happen before you buy the truck and take out a loan. A common reason for getting behind on payments is monthly payments that are just too large to realistically manage each month. Being smart about how you buy a truck can save you a lot of trouble in the long run.

First, be realistic about the truck you need and consider buying used. While it varies for different models, many new trucks lose 20-30% of their value as soon as they are taken off the lot, making them difficult to sell for enough to repay the total amount left on the loan in the first year or two. Bigger trucks with more features are also more expensive, so try to keep it to just what you need.

Also consider the other costs of truck ownership. The insurance may be higher than what you have been paying on your other car and you will usually spend more on gasoline since trucks do not get great mileage.

Once you have established the amount that you think you can afford, try putting that money into savings for a few months. You can adjust the amount lower if you discover that it is more than you can comfortably afford. It is better to know before you take out the loan. As a bonus, you now have more money for a down payment or to keep as an emergency fund should you
experience some financial challenges.

Now that you have an amount in mind, shop around for a car loan that fits that monthly payment.  Walking into a car dealership without your own financing often results in a higher interest rate than you could get elsewhere, which means you will pay more money to interest. Credit unions often have the lowest rates, so check at yours or look into becoming a member of one if you
are not already. You can always ask the dealer if they can beat your pre-arranged financing, but generally you will do better looking on your own.

With your monthly payment figured out and your financing arranged, you can now look at trucks that fit your budget. Stick to that budget, but do not be afraid to try to haggle a price down to what you want to pay. Just be prepared to walk away if it does not work out rather than paying more than you can afford.

Even if you were careful about the truck you purchased and your monthly loan payment, you still might find yourself having your truck repossessed if something else occurred to affect your financial situation. A job loss, sudden illness or unexpected bills cause many people to struggle to fulfill all their loan obligations. There are still some things you can try to do to avoid having your truck
repossessed.

The most important thing to do is to talk to your lender as soon as you know you might have a problem repaying the loan. With the recent downturn in the economy, many people have been struggling and many lenders have worked with them to avoid truck repossession because the banks do not want to have to take back and try to sell many vehicles at a time.

If your recent financial hardship is only temporary, be sure to mention that. Many banks are willing to lower your payments for a few months or even give you a couple months with no payment required if you demonstrate that you will be able to handle the payments again soon.

Most likely these amounts will be delayed rather than forgiven and you will pay them at the end of the loan term. Still it is better for everyone to avoid repossession.

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