How to Protect Yourself Against Auto Repossession

Financial troubles can affect almost anyone from time to time. There are just too many unforeseen events in life that can sneak up and take a big bite out of your bank account. When finances are tight, it's only natural to start worrying about being able to pay all your bills or getting your car repossessed. Fortunately, there are ways to protect yourself against auto repossession, even in the direst of financial circumstances.

Instructions

1. Call your lender as soon as you know you're going to be late on a payment. If this is going to be a one-time incident, let the lender know when the payment can be expected. This way, the lender knows the money is coming and won't initiate repossession procedures.

2. Attempt to renegotiate the terms of your loan if you know you're going to have trouble paying it for a while. Many lenders are willing to work with clients and may offer you such options as tacking on the missed payments to the end of the loan, granting you a forbearance or deferment, or lowering your monthly payment or interest rate.

3. Take out a short-term loan from your bank (or a friend or family member) to help you cover the cost of your car payments until you can make them on your own again.

4. Sell your car. If your car is worth more than you owe on it, you can sell it at a profit and use the money to buy a less expensive car for cash.

5. Declare bankruptcy. When all else fails, this is an effective, but drastic, way to protect yourself against repossession, at least for a little while. Your auto loan company won't be able to make a move to take the car until the bankruptcy is discharged, which may take several months or more. In the meantime, you can work on changing your financial circumstances to resume making payments.

Tips & Warnings

• Make friends with at least one customer service representative at the company through which you have your auto loan. In order to protect yourself against repossession, it's essential to check in with this person frequently during your financial set-back and keep updating him on your circumstances and plans. If your auto loan company knows you're making moves toward rectifying your situation, they'll be more likely to work with you. If you get to know a customer service representative well through your phone calls, that person will be more likely to go to bat for you with the company bosses.