Gabriella Gometra

Don't Let Your Car Be Repossessed



Posted: Friday, July 23, 2010

by Gabriella Gometra

Repossession is an ugly thing that will mess up your credit for years. Even worse in the short term is the sinking feeling you get when you realize your car is not where you parked it. At first you may think it is stolen and perhaps you even call the police. Then they tell you the car was repossessed by the bank and your humiliation is complete. Don't let this happen to you. Stay on top of your finances and make up a budget to live by.

If the numbers do not add up it must be time to take drastic action. You must sell the car and pay the bank the money owed them. This is difficult if you are upside down, or in other words, the car is worth less than the balance owed on its loan. This is a common situation when you borrow money to buy a new car because new cars will lose seventy-percent of their value in their first four years after manufacture. Make a note to yourself never to borrow money to buy a new car again. So what do you do if you are upside down? Approach the lender and ask if they will issue you a new loan for the balance left and release the title if you sell the car. Then you will be making much smaller payments that will be more manageable and this is a win-win situation for you both. If the lender will not cooperate you may need to try to get the funds from borrowing somewhere else. Even if the car is repossessed the lender will come after you for the difference between what they sell the automobile for and the balance left on the loan. It is better if you sell the car yourself since you will make the greatest effort to get the best price possible.

So what do you do now with no personal car for transportation? Remember this is a situation you will definitely face once your car is repossessed, so you might as well sell the car yourself and face your situation with a plan. If your family has another car, can you manage schedules so that you use just the one car for a while? Maybe a co-worker is willing to do a little one-sided carpooling especially if you compensate them for gasoline, which may be cheaper than other alternatives. Do you have a relative with a spare car who will loan it for a short time? While you are living this way, live on your budget or spending plan and scrape together as much money as you can to buy your next car: a used model you can pay cash for. Does this mean you must always drive cheap cars your whole life? No. Pay your car payments to yourself and your savings account and not some banker. As an example save three hundred dollars a month in your special car savings account and in ten months you have three thousand dollars. Sell the old car and combine its sale price with your three thousand and make a move up in car. In another ten months do the same thing. Now you are driving a car that is worth six thousand dollars more than your first old car. Keep on going from there and in less time than you think you can buy almost any car you want with cash. This plan will only work if you stay on your budget from now on and responsibly plan for your future and emergencies.

Author Credit: Gabriella Gometra, stay-at-home mother, writes on a diverse number of topics, such as avoiding vehicle repossesion and how to U.S. repossession law.

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