How to avoid having your car repossessed

You don't want your car repossessed, and, believe it or not, neither does your creditor. Repossession ruins your credit rating, and you will be responsible for repossession fees and the remainder of the car loan amount after the car is sold at auction. Here are some ways you can keep your car safe from the grasp of the Repo Man.

Difficulty: Easy

Instructions

1. Devise a plan to get back on your financial feet and catch up on your car payments, assuming you want to keep your car. No matter the situation, take the steps necessary to get your finances stabilized.

2. Contact the creditor(s) who loaned you money to buy your car to discuss the situation. Avoid hiding your car or not answering creditor phone calls. These evasive tactics may succeed in the short run but while you're playing this Hide-n-Seek game with your car, you're probably going to be extremely anxious about the situation.

3. Ask your creditor about their willingness to work with you as you try to get your payments back on track. Prove a willingness to pay your debt by discussing the situation honestly and an ability to do so by getting a new job or asking a friend for a loan.

4. Inquire if the creditor can reconfigure your loan. Sometimes your missed payments can be added to the end of a new loan. However, if you are fortunate enough to have a creditor who agrees to this, don't mess up a second time. They won't trust you next time.

5. Consider selling the car. Even if by selling the vehicle you won't raise enough cash to pay the full loan off, you can at least avoid the havoc and anxiety of repossession. If you do choose this route, it's probably a good idea to inform the bank about your plans of selling the car. Perhaps once the car is sold, and you have paid the creditor the money you earned from the sale, the creditor will discuss how you can pay off the rest of what you owe them.

6. Consider filing for bankruptcy if you have considerable debts beyond that of your car. However, since filing for bankruptcy is a drastic step that has long-term impact on your credit, choose this route only as a last resort.

Tips & Warnings

• If you find yourself unable to make a car payment, take positive steps to try to save up money to pay it. For example, take the bus instead of driving to work so you save on gas and parking. If you won't take the bus or you don't live near a busline, try to find someone with whom you can carpool. Sharing expenses with a passenger is another way of saving some money.

[Ailis1]

on 9/25/2007 I agree. Why would anyone want to purchase a car with a title that still has a lien on it. So the new buyer will have to carry the burden of another person's mess!

[joecowboy]

on 9/13/2007 Hmmm, sell a car when the lender holds the title? How will you get the title without paying off the loan? And why would someone else buy a car without the title?