3 Tips for Avoiding Repossession

Most people go into a financial agreement for a car loan with only the best intentions.  However, sometimes job-loss or an unexpected layoff can cause even the best conceived plans to go awry. Don’t be discouraged if this happens to you.  In today’s economy, there are an extraordinary number of defaults on everything from home loans to credit cards.

Communication is key.  If you are anticipating a possible default on your loan, communicating with the lender is likely your best course of action. Contacting the originator of your auto loan is perhaps the most critical step in avoiding repossession of an automobile, and lets the lender know that you are motivated to avoid repossession.

Seek Better Terms

When contacting the loan originator or bank, it is important to first ask what options they may be able to offer in helping you to avoid repossession. The lender may agree to indeed change the terms of your original loan agreement to better meet your current financial situation. For example, they may reduce the interest rate or extend the length of the loan. In both cases, the end result is a lower monthly outlay for you and a good chance that repossession will be averted. This is good news for both you and your lender. It is important to understand that each loan originator has different guidelines, so it is wise not to have any preconceived expectations regarding this approach.

Selling Is A Viable Option

Another possible option if the lender fails to offer you better loan terms is to try and sell the vehicle outright. When going this route to avoid repossession, it makes sense to get the most money possible for the vehicle in an attempt to cover the outstanding loan amount. If the vehicle is sold for less than what is owed, you can still try to negotiate with the lender to lower the pay-off amount. Along the same lines as an outright sale of the car is the idea of having someone else assume your car payments. For example, try advertising on the Internet to find someone who will assume your loan, and you may be surprised at the responses that you receive. However, before another person can assume your car loan payments, they will be required to qualify for the loan and have a reasonably good credit score.

All Is Not Lost Regardless Of The Outcome

When you have exhausted all other options to avoid repossession of your car, consider, as a last resort, talking with the easier for all involved to simply offer that your lender reclaim the vehicle. The lender will usually contract with a car retrieval company, who will then send a tow truck to pick up the vehicle. Work with them to set up a time and place for pick up that is most convenient. While your credit score will suffer and avoiding repossession is always the best option, do not despair, because credit can certainly be repaired over time.

This article has been provided courtesy of Taylor Brown, a leading financial writer in the online space.  He wishes to remind readers that avoiding repossession starts before you get approved for a car loan here http://www.getapprovedforacarloan.com/.  It’s crucial to budget appropriately before taking out any sort of loan, especially for assets that are subject to steep depreciation.

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