Millions of people are struggling to pay off their car loans.
Here are some options to consider if you fall into that group.
Best car loans in March 2022
COVID might be on your side for this
Between COVID and high levels of unemployment, over 7% of all car loans in the United States are in a deferment program. Skipping car payments can damage your credit score or lead to your car getting repossessed.
Because the pandemic has been difficult financially for so many people, there are many financial hardship programs that have been streamlined. These programs are designed to help you out in times of need.
However, you do have to ask in order to get assistance. Ignoring the problem is the worst thing to do.
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What steps should I take?
- See what assistance your lender can offer you
- Keep in mind repos usually happen after two or three months of no payments
- Look into auto loan deferment programs
- Talk to your bank about your options
What happens if I miss a payment and how does repossession work?
Your bank can start the repossession process as early as one day after a missed payment. However, most companies offer their customers a grace period. Usually, the lender doesn’t even charge a late fee for ten days and doesn’t report it to major credit bureaus until 30 days.
Anything past 30 days is walking very close to the possibility of repossession.
The repo company uses whatever information it can find to track down the car and tow it to a secured lot. They don’t need your keys to take the car either. If they don’t have the keys they’ll contact a locksmith to make a new set. But you’ll have to pay for it.
You’ll also have to pay the bank back the towing fee and daily storage fee. The charges range from a few hundred to over a thousand. You are liable for these charges if you get your car out of repo or not.
Repo companies can’t use physical force against you or your property to obtain teh car. However, they can follow you to work or the store and wait for your car to be left unattended.
If your car does get repossessed, your lender will likely give it back if you can catch up on late payments and towing or storage charges that have accumulated.
If you decide that after the repo you don’t want it back, you might still owe money. The bank will auction off your car and apply that money to the balance on the car and repo fees. You will be left paying the remainder.
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Here’s what not to do
- hide your car from the bank/ repo company- it will likely cost you more on the end
- stop paying- it will catch up with you
If you are struggling with payments, know that there are options available to help provide financial relief.
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