Car Repossession: What About The Outstanding Loan Balance?
If you are facing financial hardship, it becomes easy to fall behind on your car payments and possibly even lose your car altogether. Hiding your car in a private garage, removing the GPS tracker, or secretly selling your car are a few car repossession loopholes that could put you in more trouble than you’re in. Loopholes that are legal and you should consider are refinancing your loan or selling the vehicle with your lender’s permission. You also have the right of redemption after repossession, meaning you can reclaim your vehicle if you pay off the entire loan amount in one payment.
A car repossession can impact you negatively in a number of ways. First, it leaves you without a car, which prevents you from getting to work or fulfilling other obligations. It can also take a major toll on your finances, both because of the hit to your credit report and the fact that you may still owe your lender money after the car is repossessed.
When Can a Car Be Repossessed?
When you buy a car with a loan, the purchased vehicle serves as the collateral for the loan. The lender can place a lien on the vehicle’s title if you fall behind in your monthly payments. Then the lender can repossess the car to recover its losses. Exactly when a lender can repossess a car depends on where you live. In some states, a creditor can repossess your car as soon as you’ve defaulted on the loan, which could be as soon as one month after your first missed payment. In other states, it may take longer for a car repossession to be allowed.
When you take out a loan, you make a legal agreement to repay that loan. If you hide your car from your lender or decide or sell it with out the lenders permission, you’ll still owe the full loan amount. Failing to repay your loan can not only cause you to lose the car but can also cause major financial problems for you down the road.
The Right of Redemption
Even after your car is repossessed, you’ll have what’s known as the right of redemption, which allows you to recover the car by paying the remainder of the loan in full amount. It is important to know that the right of redemption doesn’t just require that you make up the missed payments. You’ll have to repay the full loan amount, including both the principal and interest, as well as any late fees that have accrued.
Unfortunately, redemption isn’t an option for most borrowers. If you could afford to pay off the full loan amount on the spot, it’s unlikely you would have defaulted on the loan and had your car repossessed.
What Happens After a Repossession?
Once your car has been repossessed, the lender will usually sell it to recover their losses from the loan. The proceeds of the sale will be used to pay down your loan balance. Most likely, there will still be a loan balance remaining after the sale. You’ll still be responsible for the outstanding loan amount.
Can I Surrender My Vehicle To Avoid Eepossession?
You may be wondering whether you can avoid repossession by voluntarily surrendering the vehicle to your lender. Yes, you can avoid repossession by simply handing over the vehicle voluntarily. Unfortunately, surrendering your car, known as a voluntary repossession, still comes with many of the negative impacts of a non-voluntary repossession. You’ll still have a major hit on your credit report. Future lenders aren’t likely to see a difference between voluntary and non-voluntary repossession on your credit. Additionally, if the value of the car isn’t enough to pay off the entire loan amount, you’ll still be responsible for the remaining balance, even if you surrendered the car yourself.
Debt Settlement After Repossession
You may be wondering “How can I pay off the repossession?” or “How can I pay off the remainder of the balance due on the loan?” Once your vehicle has been repossessed, it may be in your best interest to look at the option of debt settlement. In debt settlement, you save money by having a debt settlement firm negotiate the debt, often for much less than you owe on the repossession.
Debt settlement is fairly easy to understand, but it’s wise to know the process first. At CuraDebt, we will determine which debts of yours are eligible and create a settlement plan. We will set you up with a special purpose savings account, where you will deposit an affordable amount monthly, in order to come up with a lump sum amount. Once there is a good amount of savings in your account, we will contact your creditors to begin negotiations.
Debt Settlement enables you to determine how much you can afford to pay monthly and resolves your debt for less than you owe. It eliminates debt years sooner than traditional repayment plans and offers a debt relief option that is less damaging to your credit than bankruptcy.
If your car has been repossessed and you are left with an outstanding loan balance, call us today. We help people with debt settlement after a repossession. To learn more or to start our program, talk to a certified debt counselor toll free! 1-877-850-3328