Most automobile financing agreements allow a creditor to repossess your car any time you're in default. No notice is required. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. If you can't do this, the creditor may sell the car.
If you see default approaching, you may be better off selling the car yourself and paying off the debt: You would avoid the added costs of repossession and a negative entry on your credit report.
3 ways to AVOID repossession
As a repossession specalist, I can say that paying the bill is the best way to avoid repossession. If that is not possible, talk to the bank or lender. Believe it or not, they do not want your car, they want the money and will be more than willing to deal with you. They generally loose money on a repossession. 90% of the time that I receive a repossession request, the debtor is more than 65 days behind (average is 3 months)and is avoiding calls from the lender.
In regards to hiding the vehicle or other technique, if the agent is worth his or her salt this will only delay not prevent repossession and may end up costing the debtor more. Once a repo is made and the vehicle is auctioned, any remaining balance is charged to the debtor. This includes the cost of the repossession. The more it cost me to do the job, the more it costs the bank and that cost is passed on to the debtor.
That is called voluntary repossession. You will be required to pay the difference in what the lender sells the vehicle for and the balance on the note after that amount is applied to the loan. You did avoid repossession fees by voluntarily turning the car in. Your credit will also show this repossession for 7 years.
First off you will be required to pay the repossession fees unless you voluntarily turned the car in. Secondly you will be required to pay the deficiency. The deficiency is the difference in the amount the lender sells the car for and the amount you owe. Let's say you owe $10,000 and they sell the car for $8,000. That leaves you owing the lender $2,000. Thirdly this repossession will be placed on your credit report and will stay there for 7 years. Repossession should be the last resort after you have talked to the lender and done all you can to avoid this. Sell the car to another individual even if you have to sell it for less than it is worth, then pay the lender the deficiency out of your pocket to avoid repossession. Have someone take over the payments. Whatever it takes to avoid this.
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