Avoiding Vehicle Repossession
How to Prevent Your Car from Getting Repossessed
If you're behind on your payments and creditors are looming, what you can do to avoid having your car taken away, and getting your credit back on track.
You can’t run and you can’t hide. But you can take steps to prevent creditors from seizing your car. If you’re behind on your payments and know repossession is less than a tank of gas away, follow these steps:
- Negotiate! Talk to your creditor and set up a plan of action. They don’t want to be stuck with your car anymore than you want to lose it. Suggest a monthly payment that you can live with and stick to it! If you renege on your side of the bargain, you can be sure the tow truck will be pulling up shortly to take your car away. After you come to terms with your lender, then come up with a budget on your own. How did you get into this situation in the first place? By not following strict spending guidelines. Set up a spending chart and follow it rigorously. Track every single expense. And do not forget to make that car payment!
- Sell the car. If you’ve tried negotiating with your creditor to no avail, put your automobile on the market. Let the lender know. If you owe more that the vehicle is worth, the bank may be willing to help you set up a plan to pay the balance on the loan. Even if you think you’re car is about to be repossessed, sell it. You don’t want a repossession on your record. It will ruin your credit.
- Refinance the loan. If you own your home, one solution might be to refinance with a home equity loan or a home equity line of credit. But remember, if you don’t pay this loan back, you could lose your house.
- Downsize! Clearly, if you can’t afford your car, you can’t afford your lifestyle either. Move into a smaller apartment or house. Find a place in an urban area where you can walk everywhere. Cut back on restaurant meals, convenience foods and unnecessary trips to Starbucks. Say "no" to happy hour at the corner bar, and start living frugally. You might want to talk to a qualified credit counselor about consolidating your loans and setting up a plan to become debt free.
If all else fails and you lose your car, you could get some money back, depending on where you live. If your car is sold with an overage(sale price exceeds amount owed on the car) the overage is repaid to the owner of vehicle. This varies from state to state. Look at your contract.
Source: Federal Trade Commission
The copyright of the article Avoiding Vehicle Repossession in Consumer Rights is owned by L. Marie Dubuque. Permission to republish Avoiding Vehicle Repossession must be granted by the author in writing.
