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Facing Auto Repossession

Auto repossession is a horrible thing to have happen to you, and the repercussions can be devastating your credit score rating.

After reading this article you will fully understand how auto repossession gets initiated and how you should handle it. First you need to understand that you may be under the gun after only missing one or two payments. Contrary to what many people think being thirty days late will allow your bank to start the repossession process. Therefore, even if you are only one payment behind you could still be in jeopardy of losing your car. In most cases a typical bank does wait till you fall two or more payments behind before taking any action.

In addition, your lending institution will generally give you a heads up by sending a certified letter or by a threatening phone call. If you fail to make a payment or even an attempt to contact your bank the chances of your vehicle being placed on the repo list are greatly increased. Staying in contact with your bank through the whole process will help slow down any negative actions such as repossession. However, your credit score will still be impacted negatively.

In some rare cases your lender might defer your payments allowing you not only to keep your vehicle, but salvaging your credit score as well. Another thing to be aware of is that most state laws are different from one another. Some states have very strict repossession laws where your vehicle can be taken immediately without warning.

If you do find your self-having your vehicle repossessed you need to know that it can damage your credit for up to seven to ten years. If you are in a bad financial situation or think repossession is inevitable you should contact your financial institution immediately. In most cases your creditor is going to want to work something out with you instead of taking your vehicle back. Working something out is going to save both parties a substantial amount of money.

It will also give you a much better shot at keeping your credit in good standing. If you are unable to work out a deal with your lending institution you will be responsible for any towing, storage, and legal fees acquired by the bank.

Adding up a tow bill, storage, and legal fees can sometimes total a couple of thousand dollars. Having auto repossession is just a horrible thing and it should be avoided at all costs. Even if your car is repossessed the bank will most likely sell it for a fraction of the cost and then come after you for the remainder. Unpaid balances like this can even lead to wage garnishments. If you already know that you will not be able to prevent your vehicle from being repossessed at least contact your lender to make them aware. Working out a way to surrender your vehicle will at least save you the tow bill, storage, and any legal fees.

Even though your credit will still be damaged a voluntary repo is going to look much better than an involuntary repo.

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Auto Financing

Repo Cars Online always recommends that consumers educate themselves on loan terms before signing any binding contracts when financing a vehicle. Your interest rate will be one of the most important things when it comes to financing a vehicle. The reason for this is because it will calculate the amount of money you will be charged on the money you borrow. Usually interest rates on auto loans are fixed but sometimes they can be adjustable. A fixed interest rate is the best way to go because it is a set amount for the entire life of the loan. On the other hand a variable interest rate can move up and down which could potentially cost you more money. Therefore, if you have a variable interest rate that is prime plus 2% your rate will always be two percent above prime. Whenever the prime interest rate that banks use goes up, so will your auto loan. Sometimes the rates go down which could save you money but this can be a risky gamble. Since fixed rates don’t change they will ensure you the safest and best bet.

A fixed rate will be the same through your entire loan so you will never have to guess what your monthly payment will be. Another thing you need to stay away from is pre payment penalties. These can be a terrible pitfall if you decide to pay your loan off early for any reason.

If you do have a pre payment penalty you can be charged a set amount for paying your loan off early. Typically, these fees are a set percentage that is agreed upon when you sign for your auto loan. The next thing you need to consider is your loan term. This will determine the length or number of years your loan will have before it must be paid off. If you have a five year loan and you borrow $20,000, you will have to pay back your loan amount plus interest within the five year term.

In most cases auto loans are three to five years in term. However, recently longer terms such as 72 months and even 84 months are being more common with good credit. Last but certainly not least you will have an auto insurance policy. Any auto lender that loans you money on a vehicle will require a full coverage insurance policy to protect the banks collateral. The insurance policy will pay your vehicle off if for any reason the car is wrecked, stolen, or severely, damaged. Since automobiles usually depreciate at a steady pace it is also a good idea to get GAP insurance. If you don’t have GAP insurance you could be forced to pay off any difference that your primary insurance company won’t take care of.
Unfortunately, this can leave you owing money to your bank without still having the actual car. Making payments on a car you no longer have is definitely not a situation you want to get into. It can also potentially cause you to have a charge off or repossession on your credit. Hopefully now you will have a little better understanding of how to finance an automobile and can start shopping for the perfect loan.

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Repossessed Cars Frequently Asked Questions

Vehicle repossession is what occurs when a creditor, such as a loan company, employs a loan-recovery agent to repossess your car. If this occurs, don’t worry, all is not lost – however, time is of the essence. You must move fast if you want your car back.

Frequently Asked Questions:

Q: Does the loan company need to inform me in advance that they are repossessing my vehicle?
A: Not necessarily. In most situations, the answer is no, they do not need to inform you.

Q: Does the loan company need to inform me before my car is auctioned off?
A: Yes, the loan company must provide you some procedural documentation at least 15 days before your vehicle is put up for auction. The formal document is called the Notice of Intent to Sell Vehicle. It contains the following data:

1) That your repo vehicle or repo boats will be sold within 15 days of the document’s mailing date, or any other notice you have been provided.
2) The cost you will need to pay in order to regain your vehicle, and prevent its sale.
3) The procedural information – where the payment must be made, whom it must be directed to, where the car can be picked up, etc.
4) The document will also inform you of your right to an extension period, which effectively delays the vehicle’s sale for a period of ten days. In order to do this, you must fill out an attached request form and mail it to the return address in order to delay the vehicle’s sale.
5) Finally, if the amount the car is sold for does not meet the remaining balance that you actually owed on your car loan, then you
will be informed that the onus is upon you to repay the difference between the revenue generated by the sale, and the remaining balance on the loan.

Q: Under what circumstances can they actually refuse to return repo cars?
A: There are certain requisites that must be met before the company can posit an outright refusal to return the vehicle. They are:
1) If you withheld information (or lied) on the initial credit application to the loan company
2) If you attempted to avoid confiscation by hiding the vehicle
3) Damaged the car (or threatened to damage the car), or used it as a tool in perpetuating a crime
4) If this is not the first repossession within a 12-month period
5) If this is the third time the car is being repossessed since your original purchase

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