You've got to start thinking clearly if you fear your car is about to be repossessed. This is no time to avoid the lender's phone calls and letters. While you have few legal rights, acting promptly instead of ducking the inevitable may prevent repossession. You don't want the cost of repossessing your car added to the loan payments you already have overdue.
Determine when you will actually default on your car loan. This information is in the contract you signed for your car loan. Many states allow a small grace period after missing the first payment before declaring that you're in default. For example, in South Carolina, you cannot be held in default until 10 days have passed after the first payment was due.
Call your lender as soon as you think you might default on your car loan. If you call them before you actually default and let them know that you are unable to pay because of a very short term cash flow problem, you may be able to temporarily avert a car repossession.
Pay the amount due on your car loan. There is a clock ticking on this, so it's best to pay as soon as possible. While a lender has no duty to inform you that it is about to repossess your car, some states, such as South Carolina, require that the lender send people who have defaulted a Notice of Right to Cure, which gives them 20 days to make the overdue payment. If you do not have the funds, but anticipate being able to pay eventually, consider taking out a loan from family, friends or your bank.
Redeem your car. Redeeming your car refers to the act of paying money to retrieve your car after it already has been repossessed. Although the situation may look grim, all hope is not lost until the lender actually sells the vehicle. The lender's duty to keep you informed after the car has been repossessed varies from state to state. In California, the lender must give you 15 days' notice before it can sell your car. Furthermore, it must provide information as to how you can redeem your car. Often you can reinstate the terms of your original loan by paying repossession fees and the amount you owe.
Things You Will Need
- If you suspect your car is about to be repossessed, remove your personal effects and any upgrades to the car you may have installed, such as a stereo system, seat covers or mag wheels.
- If your debts are overwhelming, consider declaring bankruptcy. This extreme step puts a black mark on your credit for up to 10 years and should never be considered lightly. However, it will stop repossession efforts, at least in the short term because the judge issues an order to all creditors that they must cease all collection efforts.
- Don't try to hide your car if you know the repo man is coming. The harder you make it for the repo man, the more you will ultimately pay in repossession costs.
- Keep your temper and don't vandalize your own car. This will only reduce the value of the car when the lender sells it -- and increase the amount that you are obligated to pay.
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