Car Repossession: What Next? Car loan agreement states that when you miss a monthly payment the procedure can formally begin and if you are late by just one day the bank is entitled to take your vehicle back. But how would a bank actually take your car back when you miss just one payment on a loan they have already taken over? What options does a struggling borrower have? And how come we don’t hear more about repossession in the news?
The reality of car repossession is that very few people are actually aware that they can be forced to give up their cars without warning. Banks and lending institutions don’t want you to know that the car can be taken away even if your payments are up to date and the bank believes that you are responsible enough to pay your monthly obligations. Most people, unfortunately, are not in a position to know that their car can be repossessed until it’s too late. When this happens and no action is taken, the bank may be forced to sell the vehicle in order to raise the remainder of the loan amounts. The amount of the sale of the car will depend on a number of factors including the amount of the outstanding loan, the value of the car and other financial commitments. The vehicle will most likely be sold at auction along with the remaining balance on the loan.
What are the implications of losing your car repossession? You could lose your freedom. If you have missed payments on your car loan, the creditor may then repossess your vehicle if there is still a means of sending out the payments. However, some creditors may allow you extra time before they proceed with the repossession. This is known as ‘creditor appeal’. If you miss payments, they will now consider your creditor’s appeal and take longer to process it, meaning that the car repossession date may move further backwards.
If you’ve been in a car repossession situation for long enough, you may find yourself having to live in the vehicle until the loan agreement has expired. If you have missed payments on your vehicle, the creditor will now consider the remaining period of the loan agreement. At this point, they will begin the process of trying to sell the vehicle, whether the price is acceptable or not. If the sale of the car fails, you’ll have to pay out of pocket costs for the vehicle and the loss of your freedom due to car repossession.
So how do you keep your vehicle until your loan term has expired? During the course of the loan period you should make all your monthly payments on time, in full, for a few months to get your car repossessed. If you have been in a car repossession situation for long enough and you have missed several monthly payments, you may find that the creditor is no longer interested in getting the vehicle back and is likely to sell it off at a local auction or on the classifieds. Even if the vehicle isn’t being sold, your lender may still want you to make extra payments so that the amount owed can be reduced and possibly the entire loan term will be extended. Making extra monthly payments is a good way to prevent car repossession.
If you have missed payments on your car loan, there are a number of different solutions to prevent it from occurring again. You can contact a debt management company to work with you on managing your loans better. If you can make some more on-time payments to your creditors, this will also go a long way towards making sure that you don’t have any more missed payments. There are also a number of agencies that will work with you to get you into a debt management plan which allows for lower monthly payments and less interest so that you can afford to make your loan payments on time. Remember that focusing federal credit union loan programs on helping consumers avoid car repossession gives them an added incentive to work with you, therefore keeping more money in your pocket.