Is Car Repossession a Reality for you?
Do your car loan payments keep you awake at night? Are you threatened by repossession of your car? If you are finding it difficult to manage your payments, you are not alone. There are thousands of Americans who are suffering from the same problem.
Why should you avoid Car Repossession?
You may think that there is no other option than to let the lender take away your car. But, it is important that you leave no stone unturned in avoiding car repossession because of the following reasons:
>> You will not have a car to drive after car repossession
>> It stays on your credit report for seven years
>> People with car repossession do not get car loans easily
>> You will have to pay the balance due on your loan after car repossession
>> Lenders may sue you for the costs associated with repossession of a vehicle.
What Strategies should be followed to avoid Car Repossession?
Car repossession is bad because it has catastrophic complications. So, it is essential that you avoid it with the help of the following strategies:
Make a Few Payments
No lender will repossess your car even when there is a chance of getting back a part of his investment. So, it is important that you make a few payments. It will help you in avoiding car repossession.
Do not worry if unemployment and lack of job opportunities have caused a terrible cash crunch. You can raise money by selling a few of your belongings such as jewellery, extra furniture and other appliances.
Apply for Deferment
Lenders want to do business and earn money. They lose money when they repossess a car because of the following reasons:
a. They have to undertake unnecessary paperwork
b. They have to bear the repossession costs
c. They are unable to generate enough money by selling the car at an auction
d. They still have to recover the balance due on the loan from you.
So, whenever you face the possibility of car repossession, work with your lender. There are chances that he may provide you a deferment of a month or two. The time period is enough to find a new job.
Opt for Loan Restructure
If you can manage a smaller monthly payment, you can ask the lender to restructure your loan. He will extend the loan term and reduce your monthly payment amount. You should not worry about the high amount of interest that you will pay after loan restructure because you can refinance the loan in future.
Sell the Car
If your family has more than one car, you sell your car and share the other car/s with your family members. It will help you avoid the bad credit ratings that accompany repossession.
Remember that selling your car is an option only when your car has equity in it. If you owe more to the lender than the car's current value, you won't be able to repay the lender.
Ask for Help
A friend in need is a friend indeed!
If you cannot sell your car or make smaller payments, ask a friend or a family member to help you make payments. If someone agrees to assume the responsibility, you can transfer the title to his name.
Being in a financial crunch can be distressing, but do not lose hope. By employing the strategies mentioned in this guide, you can work your way out of this terrible situation.