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Abc Medium. Abc Large. Once seized, your car will probably be sold at auction. If your car sells for less than you owe, you may be sued for the difference, known as a deficiency, plus any applicable fees.
You can sometimes reinstate the loan and work out a new payment plan, too. The repossession may not be removed from your credit report in these situations, but your new payments will generally be reflected if you make a deal with your lender but not if you buy the car back at auction.
Before getting your car back, think through these questions:. If you got your car back, would you be able to afford insurance, maintenance and gas? Neglecting important repairs or getting into an accident while uninsured may land you in an even more difficult financial situation.
Do you have access to affordable public transportation or a carpool? Getting to work by bus or other means may be a better option than reinstating your loan or paying your balance and repossession expenses in full. Do you plan to declare bankruptcy?
Even when your car is towed away, you still have certain protections:. The lender or repo agency can repossess the car but not the items inside. In some states, the bank or repo agency may be required to give you a list of items inside the car and tell you how you can retrieve them.
Generally, this does not apply to accessories you may have installed in the car, such as new rims or a souped-up audio system. If you feel that your rights have been violated, consider contacting a consumer lawyer. This is called a deficiency balance. Deficiency balances are common, especially when your auto loan was for a new car.
If you ignore this deficiency balance entirely, the account may be sent to collections. In some cases, you may find yourself facing a balance on your repossession. This can happen when the repossessed vehicle is sold by the lender, but the existing loan balance is not covered.
The remainder of your original loan, less the amount received for the vehicle may come back to you. If you ignore this balance, it can also be sent to collections and further damage your credit.
It typically occurs after a delay in your auto or car loan payments. Depending on the contract, your lender may be able to start the repossession process after the first missed payment. Other times a lender will let up to 90 days pass before beginning the repo process. This shows initiative and may result in the lender working with you through a hardship.
Voluntary repossession is when you return your car to the lender because your monthly payments are no longer affordable. An involuntary repossession is when the lender comes to take back the car. In this scenario, the lender can legally take the car from your property without your permission. The balance due on your loan still belongs to you even after repossession of the vehicle. This implies that your auto-lender can still continue to collect the auto loan by any means.
He can as well have the right to sue you for a deficiency judgment. This includes the balance due on the loan and costs associated with repossession of the vehicle. Your lender has the right to sell or auction your vehicle, but if the auction price is not enough to cover your loan, the balance is your responsibility.
Repossession badly hurts your FICO credit score. In fact, it can prove to be one of the worst things that can happen to your hard-earned credit score.
Aside from bankruptcy anyways. Already, the delayed vehicle loan payments leading up to the repo are hurting your credit score once. Moreover, it will also be listed in the public records section of your credit report. In addition to this, a collection associated with the deficiency judgment will negatively squeeze your credit score. Subsequent issues may arise as the repossession ages.
This impact on your credit score will lessen only as the time passes with your timely payments on your other credit obligations.
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