As you probably already know, purchasing a car can be an overwhelming responsibility. Like most people, chances are, you’re not going to purchase your new wheels with cash. So, you’ll have to take out a car loan. The most important thing to remember about a car loan is that all the payments must be made on time, until it is all paid off. For many car owners, this task is easier said than done.
If you happen to miss your car payments for two to three months, your creditor has the right to tow your precious car away, and put it up for auction. This process of taking your car from you, and then selling it to recoup the money that you owe, is called repossession.
Important note: If you’ve already gone a few months without paying your car loan, you might want to consider, filing for bankruptcy!
Repossession: Step by Step
1. Initial Warning – Your creditor will contact you via phone or mail/email, if you’ve defaulted on your payments for two to three months.
2. Goodbye Car – If you still haven’t paid them, they will ask a repossession company to find your car, and have it towed away.
3. Covering You – Once your vehicle has been towed, the hirer will be given a chance to pay for your defaulted payment, in addition to the repossession charge.
4. Auction – If they’re still unable to recover the payment from you, your car will be sold off at a the first available price, without much bargaining. This money will be used to pay off your automobile loan.
5. You’re Not Off the Hook – Usually it will never cover the full loaned amount, which means you still have to pay for the balance.
6. The Unfortunate Road Ahead – Now, the situation at this point will leave you with no car to drive, and even worse, a debt to pay. The repossession will certainly impact your credit to a very large extend.
How Repossession Impacts Your Credit
Once your car is repossessed, most banks will decline a secured loan application for a relatively large amount. This not only hurts your credit, it also lands you with limited choices for applying for a loan. When it’s time to buy a home, this also requires taking out loans, and with the repossession on your history, you will not be able to get a typical secured home loan with reasonable interest rates.
What Now?
Online Finance Firms – You can try working with one of these types of sites, as they tend to be very suitable for people with bad credit records. Still, the interest rates tend to be high, and the late repayment penalties tend to be high as well. Please be aware of these drawbacks.
Smaller Banks – Working with smaller banks is another option to consider. They will probably lend you a smaller amount than a finance company, it’s better than no loan at all.
Don’t let car repossession and bad credit control your life. Don’t hesitate to contact The Adkins Firm. Our Atlanta bankruptcy attorneys will help you get out of debt and return to the life you deserve. After all, we’re the premier bankruptcy lawyers in Atlanta!
