If your car-loan lender repossesses your car, van, truck, SUV, or other motor vehicle,
it might sue you to recover any money you still owe on the loan
(called the “deficiency”). If a repossession happens, you’ll need to decide if it’s worth paying an attorney to help you.
What happens if you don’t pay the deficiency balance?
If you refuse to pay,
the debt will most likely be sold to collections
. But either the lender or the collector can choose to file a lawsuit against you, which could result in a wage garnishment, a levy against your bank account or a lien against your other property.
Will a voluntary repossession hurt you?
If the bank has to come take the vehicle, they will report the account as a repossession. That will be reflected on your credit report, as well. Both are very negative, but
a voluntary repossession may hurt your credit scores slightly less than a repossession
.
Can you negotiate a voluntary repossession?
If you are unsuccessful in re-negotiating the terms of your loan,
you can agree to a voluntary repossession of the vehicle
. This helps to keep the creditor expenses that you will be liable for at a lower level.
How long does a voluntary repossession stay on your credit report?
A voluntary repossession — along with any resulting collections or court judgements — can remain on your credit reports for
up to seven years
as a derogatory mark.
Can you give back a car on finance if you can’t afford it?
Can you give your car back to the finance company?
You sure can
! Also called “voluntary repossession” or “voluntary surrender,” walking away from your vehicle is a last-resort option if you can’t refinance or sell your car.
Do you still owe after a repossession?
If your car or other property is repossessed,
you might still owe the lender money on the contract
. The amount you owe is called the “deficiency” or “deficiency balance.”
How do you handle a voluntary repossession?
To surrender your vehicle,
inform your lender you can no longer make payments and intend to return it
. Arrange the time and place, and keep records of when, where and with whom you dropped it off. That doesn’t mean you’re done paying, though.
Should I pay off a repossession?
Paying off a repossession can help your credit score since it reduces debt owed
, and you may be able to get the item removed from your credit report. However, the significance of impact on your score depends on your credit history and profile and whether you take a settlement.
What are three possible consequences of defaulting on a car loan?
Lenders sell repossessed cars at auction, and if it doesn’t recoup the remaining balance of the loan financing it, you’ll owe what’s called a “deficiency balance.” Ultimately, the lender could sue you for the money you owe.
Your wages could be garnished; a lien could be put on your home
.
Do I have to pay the deficiency balance?
The original borrower is responsible for paying the deficiency balance
. However, some lenders may forgive or write off that balance if it’s clear the borrower has no assets to pay. In those cases, any amount greater than $600 counts as taxable income.
How do you negotiate a deficiency balance?
In your letter
offer to settle the deficiency balance for 20 percent of the balance
. Continue negotiating through letters if the creditor balks at your initial offer, or call the lender if you’re comfortable negotiating over the phone. Increase your offer once a month until you have a deal.
Can you walk away from a car loan?
Voluntarily Surrender the Vehicle
If you’ve defaulted on your auto loan, the lender may choose to repossess the car. The process isn’t pleasant, and it can wreck your credit score. If you want to avoid repossession, but you have no other options,
you can voluntarily surrender the vehicle to your lender
.
Can a creditor take my only car?
Can the Judgment Creditor Take My Car? The short answer to the question, “Can a judgment creditor take my car?” is “Maybe.” Generally,
creditors will only take a vehicle if your car has value
. A car with value can be beneficial to a creditor, as they can sell it and use that money to pay off the debt you owe.
How can you get out of a car loan?
- Refinance your loan. Refinancing your loan will help you save money month to month, in the long term or both. …
- Pay off the car loan. …
- Renegotiate the loan. …
- Sell the vehicle. …
- Voluntary repossession.
Does voluntary termination affect my credit score?
Does voluntary termination affect my credit score?
Voluntary termination will probably appear on your credit score
. However, as long as you make your 50% repayment amount and any additional charges (e.g. for wear and tear), it is unlikely to have a sizeable impact on your ability to get car finance in the future.
Can a bank revoke a loan on a car after I signed the contract?
If you got your loan through the bank directly, it’s rare to have your loan revoked after you’ve purchased your car.
Banks may be able to revoke your car loan if your contract had language that protects the bank’s right to do so
.
How many times can you defer a car payment?
It may be that
your lender only allows one deferment, others could allow two or even more
. The timespan this number applies to can also vary by lender; from a yearly basis, to your entire loan term.
How does a voluntary repo work?
In a voluntary repossession,
you return your vehicle to your lender when you are unable to make payments
. You inform your lender you will not make payments going forward and that you want to surrender the car. Then, you schedule a time and place where you bring the vehicle (and a ride home), and you turn over the keys.
Can you get another car after a repo?
Securing a loan to buy a new car is possible even with a repossession on your credit report
. However, you may have a hard time finding a lender. And if you do get approved, the financing can be expensive.
What happens to your personal belongings when your car is repossessed?
Your personal belongings are your personal belongings. If a repo company took your car,
you have the right to get these belongings back without having to pay a fee
. Even if your car has been repossessed, you have rights including the right to get your personal belongings back.
