How to Avoid Auto Repossession

You may not love your car, but you don't want to see it on the auction block with a "Cars 4 Sale" sign in the window. So you've fallen behind on your automobile payments and now face auto repossession. It is possible to prevent an automobile repossession from taking place, but it isn't a given. If walking away from your vehicle is out of the question you need to take proactive steps to keep your car in your care. Most people who face potential repossession have more to work with than it might appear.

Things You'll Need

• Vehicle financing documents
• Title and registration
• Payment plan
• Source of income

Instructions

1. Call your lender to discuss your situation. When you keep in contact with the lender you have a better of chance to work something out. Ask your lender about refinancing your car loan. Refinancing can lower your payments by extending your loan term and bring your account up to date, which gives you more time to get your finances in order.

2. Make some type of reasonable payment arrangements. Let the lender know you are facing a hardship. For example, if you are past due two payments, see if you can pay a payment and a third until your account is current.

3. Review your resources. You may be able to ask a friend to help you out with the payments. He may be willing to help if your situation is temporary. It's never a good idea to build up credit card debt, but this could be an option to keep your car from being repossessed. If you have the available credit, you can make a payment using the card. Depending on your credit card limit and the balance on the car, you may be able to pay off the entire balance by transferring it to a credit card.

Tips & Warnings

• Do not use a credit card to prevent repossession. Doing so is a clear sign you are living beyond your means and will only increase your debt by making car payments with a credit card.

• You could qualify for a payment holiday. Contact your lender for eligibility. Your loan may need to be up to date, but if you think you are about to fall past due, a payment holiday could help. A payment holiday allows you to skip a payment, though eventually it will have to be paid. Your loan term will be extended as a result.

• Beware of "fast" "free" and "bad credit" refinancing options. Most turn out to be scams.