May 10
31
How to Handle a Car Repo
No one wants to go through a car repo. Losing your car to the lender is not only upsetting, but also frustrating as you have to adjust to not having that vehicle anymore and possibly deal with long-term consequences. Keep reading for some help on how to avoid car repo or make the best of the situation if you can’t avoid it.
Ways To Avoid Having Your Car Repoed
Since the lender, usually a bank or credit union, owns the title of vehicles they offer a loan for, it is pretty simple for them to repossess, or take back the car, when someone falls behind in their payments. The lender will notify them that they risk repossession if they do not catch-up in their payments.
A good time to negotiate with the lender for additional time or a restructured payment schedule is when you first get the notice of impending repossession. If you give them a reason that you are behind and how you plan to catch up (maybe a sudden illness or other even have caused you unexpected cash flow problems, but you expect an insurance reimbursement or other income soon), they often are willing to work with you. Many lenders would rather get back the loan money with interest, especially during a time when so many are experiencing economic hardships.
It you are expecting that you will face some difficulty with your payment soon, whether you are recently unemployed or your income is seasonal, it is even better to see if the lender will be flexible and create a new payment plan before you run into trouble. Often these setbacks are unexpected, but it is better if you can work things out before.
If you get a new repayment plan it will help you avoid repossession. Then, try to sell the car before the bank repossesses it. After it is repoed, it is usually sent to an auto repo auction where it will likely less for much less than what you can get for it selling it on your own first.
What To Do When Your Car Gets Repossessed
Once your car is taken back by the bank, they will sell it as quickly as they can. Typically these cars are sold in large vehicle auctions with many other repo cars. Banks want to get as much money as is left on the loan, but they will settle for less since they do not want to keep the vehicles and pay the storage costs for them. The car will go to the highest bidder at the auction.
If the car sells for less than what you still owed for it, the lender can hold you accountable for that deficit. While they usually won’t be able to garnish your wages (take them directly from your paycheck so you don’t see that money first) like government agencies can, they can sue you so you will be required to pay that amount. However, if you have been able to gather together some money since your car was repossessed, you may be able to settle with the lender out of court before they sue. It is common to be able to settle for a fourth or a half of the amount of the deficient, saving you not only that money but the court fees as well.
Be sure to get the settlement amount put into writing. You want to make sure that both parties have agreed to the total amount you will pay and that the lender is accepting that amount as the full settlement, considering your debt paid in full. You want it clear in writing that it will be a one-time payment not the first of two or three payments, though if that is what you want you may be able to negotiate one like that. While having a repossession on your credit history will hurt it and it will be clear that there was a settlement, the balance owed should show as zero.
Related Articles You Might Be Interested In
What is Auto Repo?
Ten Benefits of Repo Car Sales
Avoiding Truck Repossession
this is really cool, I like here!