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How to prevent your car from being repossessed

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Buying a car with a bank loan is so common that most of us don’t even think about it – and these days you increasingly need a bank loan to buy a car. used auto. When you take a loan for a car you sign an agreement that says you will make the required payments or that the lender can come and take the car from you, but car dealerships don’t have a reputation for explaining the amount of a loan really cost – and how difficult it might be to keep paying for it.

In most states, all it takes to trigger a default on your loan and begin the repossession process is one missed payment, so now you’re sweating, watching the street for tow trucks. You’re trapped in the classic Catch-22: you need your car to get to work, to shop, to live your life, but you can’t afford to buy your car. How do you avoid having your car repossessed?

What not to do if you are worried

First here is What not to do if you are trying to hold on to a car that has been listed for repossession. There are several really bad ideas that you shouldn’t be tempted to try:

  • Hide the car. It might sound like a genius idea, but it’s probably illegal. You voluntarily signed an agreement with your lender, and part of that agreement covered what would happen if you defaulted. Hiding the car is a very bad idea.
  • Confront the repo agent. Physically threatening or verbally harassing the person coming to tow your vehicle will get you nowhere and could get you in trouble. Also, even if you manage to chase them away, you’ll have burned any chance of having some wiggle room with them in the future.
  • Hiding the car. Change license plates and cover the vehicle identification number (VIN) on the car just makes the resuming professional a bit tougher. In most states it is illegal to obscure a VIN, so the repo pro will simply call the cops and they will be within their rights to unlock the car and remove the obstruction. And the repo person has multiple ways to identify a vehicle, so your efforts are likely fruitless anyway.
  • Sit-ins. If you see a repossession agent approaching, you might think jumping in your car and locking the doors is a great idea. And yes, that’s right, they’re not going to smash the windows and drag you out, or tow the vehicle with you in it. But all you do is kick the box. The repo person will be back, probably just before you leave for work in the morning.

Strategies that can work

So what box you do if the repo man is looking for your turn? Here are a few things you can do without getting in hot water:

  • Keep it in a closed garage. If you have a garage on your property that can be locked, you can store the car there (technically it doesn’t hide the car, because everyone knows exactly where it is). Contrary to popular belief, repossession officers are allowed to enter private property to claim a vehicle, but they cannot “breach the peace”, which generally means they cannot use force or violence to do so. This includes bypassing locks on private property. If the garage is unlocked, however, they are perfectly entitled to open it and take the car. MMost car loans include what is called a “collateral agreement” which allows agents authorized by your lender to enter private property. Keep in mind this will only work for so long – they’ll end up picking up your car somewhere else when you drive it, or get a court order and bring the sheriff with you.
  • To negotiate. Your lender does not want your car. They want the sweet interest you agreed to pay on the loan. The car itself lost a lot of its value the moment you pulled it from the lot, and has become increasingly worthless ever since, so they’d much rather have your money. If your car is repossessed, try calling your lender to work out a deal. They will often be open to any arrangement that involves you eventually satisfying the loan. You can also try talking to the repossession agent. They don’t have the power to make your repossession go away, but they do have the option of putting your case at the end of their to-do list. There’s no guarantee of success, but calling them and pleading for some breathing room might give you some breathing room.
  • Sell ​​the car. If you’re not in default yet, but know you will be soon, you can check to see if you can sell the car for enough to pay off the loan. Make sure you know all the fees you will need to cover and that there are no penalties for prepaying your loan. Obviously, that leaves you without a car, but it also leaves your credit score intact, allowing you to buy a cheaper car.
  • Bankruptcy. If you can declare bankruptcy, you can probably keep your car even if you’re in default, provided you can work out a payment plan with your lender. The two forms of bankruptcy open to individuals, chapter 13 and chapter 7, offer the option of hanging on to your car. Bankruptcy isn’t a magic bullet, but it does offer a realistic chance to keep your car in the short term and restructure the loan in the long term so you can pay it off.

Losing your transportation due to repossession can turn a bad financial situation into an impossible financial situation. Your options are limited when it comes to protecting your car from repo professionals, but there are are some options. Don’t do anything crazy.