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The Car Repossession Procedure - Know It So It Doesn't Happen to You

The Car Repossession Procedure - Know It So It Doesn't Happen to You
"""In a perfect world, everything would always go according to plan.

Occasionally, this is not the case.

If you're in a bind or on the verge of falling behind on your payments, we can help. Contacting your credit card, mortgage, and auto loan companies to explain your situation is the best course of action.

Take steps

If you have a car loan, you recognize the significance of making timely payments. If you are unable to make your payments on the due date.

You are granted a grace period of 30 days to make a payment without the lateness being reported to credit bureaus.

There is something you should know if you do not anticipate being able to make a payment before the 30-day grace period expires or if you anticipate being in a financial bind for longer than 30 days.

Ignoring calls from your creditors is a poor decision.

You are not alone in feeling embarrassed or reluctant to contact your creditor. Due to financial difficulties, thousands of individuals fall behind on their payments. The person on the other end of the line is trained to handle calls of this nature and will be eager to assist you in any way possible.

What ought you to do?

Most auto loans include a clause that allows you to defer payments for a brief period of time while you get your finances in order. Possible alternatives to deferment include reduced payments until the full balance can be paid.

Your choices will depend on the specifics of your auto loan and the terms agreed upon at the time of purchase.

If you have an excellent standing:

Call your creditor and explain that you've experienced some setbacks, then inquire about your options for deferring your loan payment until you are able to make payments. This gives you approximately two months to catch up.

If your account is not currently in good standing (later than 30 days):

Call your creditor and explain that you've experienced some setbacks and would like to make arrangements to catch up on payments or defer a future payment. Inquire about your options for delaying your loan payment until you are able to pay. Typically, you will be required to bring your account current within 30 days before a deferral can be granted.

How does this benefit you?

Repossession of a vehicle never ends well for anyone. Not you and not even your creditor. Once a vehicle has been repossessed, it is typically sold at auction for a fraction of its original price. This is a situation in which everyone loses.

You will not be reported as delinquent to credit bureaus while your loan is in deferment because you have agreed to pay at a later date.

The obvious downside to this is that your loan agreement will be extended and you will ultimately pay more interest. Nonetheless, this is preferable to having your vehicle taken.

When is your car subject to repossession?

It depends on the specific terms of your auto loan. When you miss a payment, you are typically considered to be in default of the loan agreement.

Consequently, you are granted a 30-day grace period. Some states permit repossession after a single missed payment. The longer you wait to make your payment, the closer you are to having your car repossessed and receiving a severe credit ding.

A repossession will remain on your credit report for up to seven years and reduce your chances of obtaining future auto loans. You may still owe the difference between what you owed your lender and what your car was sold for, even after repossession. This is known as a deficit balance. A deficiency balance is typical, particularly if you purchased a brand-new vehicle.

Please note that these options are only available to individuals experiencing temporary hardships. It is not recommended for foreseeable long-term situations."""

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"The Car Repossession Procedure - Know It So It Doesn't Happen to You" was written by Mark under the Finance category. It has been read 59 times and generated 0 comments. The article was created on and updated on 14 January 2023.
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