How to Prevent Vehicle Repossession

Many people live in fear of losing their car to the repo man. After all, if you lose your car, you can't get to work. Then you lose your job, and you can't get your car back, and so forth. If you're behind on your car payments, you may want to just hide and duck your creditors. But you can't do that forever, and it will eventually get you in trouble. Follow these tips to avoid getting your vehicle repossessed, even if you are in default on your car loan.

Instructions

1. Learn to negotiate. If you have a bank loan on your car, the bank doesn’t make any money at all when it repossesses your vehicle. If you're behind on payments, call your loan officer and see if you can renegotiate the terms of your loan. If your payment is $300 a month, but you can only afford $250, ask if this is acceptable. You'll have to pay for it longer, but at least you'll be paying an amount you can handle. Stick to the terms of the new contract.

2. Sell the car if your bank or lender won't renegotiate. Be sure you tell the lender the car is for sale. This may end up costing you some money, and you'll be without a car for a while, but at least you're out from under those payments you can't afford. If you have more cars than you have drivers in your family, eliminate the vehicle that's costing you the most. Decide if you and your spouse can share a car.

3. Get a cheaper car. Do you really need a brand new, gas-guzzling sport utility vehicle that seats seven people? Could you get by with a small family car that gets better mileage? Not only will the small car be more economical fuel-wise, it will also cost you less every month.

4. Refinance. If you own your home, you may be able to refinance your car using the equity in your house. But remember, if you default on this loan, the bank can repossess your home, not just your car.

5. Set up a budget and stick to it. Sit down and figure out what you bring in every month. Determine where you can cut costs so that you can make that car payment. After all, you need your vehicle, but you don’t need some of the luxuries you might be paying for. Prioritize, and focus on getting out of debt.

Tips & Warnings

• If your car gets repossessed and the bank sells the car, you could be eligible to receive some money back if the sale price is more than the amount owed. Look into your state's regulations.

• Be cautious of lenders who offer you a "great deal" when you have poor credit. Typically, these lenders charge exorbitantly high interest rates.