Most customers do not pay attention to the importance of keeping up to date with the monthly payments of the car till such time they have actually managed to miss a few. All of a sudden the phone begins to ring as the lender or his representative gets impatient. If you do not regularize the payment immediately, then it may be possible that you walk out one day only to find your car missing from the spot from where it had been parked. In most cases, the vehicle would not have been stolen but repossessed by the lender – the agreement that you had entered into authorizes him to do just that, subject to certain restrictions.
How Do You Get To Know Your Rights?
Even before you actually miss out on making a monthly payment; it is vital that you know what your rights are. The security document that you had signed while taking on the loan specifies all the rights and obligations of both the parties. This document is given by the lender to the Department of Motor Vehicles to enable putting a lien on the vehicle. Usually you will have a copy but if you are missing it then you can request the lender to give you a copy from his records. Be sure to read it thoroughly though you will discover that these documents are legally watertight and there’s nothing much you can do as they are prepared by topflight lawyers appointed by the finance companies to protect their very large financial exposure.
How Can the Lender Repossess the Vehicle?
All automobile loans are secured loans, which basically mean that the vehicle acts as the collateral to secure the loan against default. In a situation when you consistently miss out on making the monthly payments, the lender can take back or repossess your car. According to the terms of the loan agreement, it is also not necessary for the lender to also inform you that the act of repossession has been initiated.
What Happens After Repossession?
After the lender has taken possession of your car, he will send you a notice asking for the payment of the full loan amount outstanding by a certain date else he would sell the vehicle off for the maximum amount he can get and set it off against the loan. If the sale proceeds are more than the loan, you will get something back. However, in case you are upside down, i.e. the value of the vehicle is less than the outstanding loan, and applicable recovery and legal fees, and then there will be amount remaining called a “deficiency balance”. You, along with your co-signor, are legally obligated to pay that amount. Unless this is paid, the lender can file a lawsuit to recover the amount from you and the co-signor. This may happen even in cases the car has been returned voluntarily by you to the lender.
Debt Relief: Act Now Before Car Repossession
If your financial status has been damaged extensively due to your changed circumstances or gross financial imprudence then it is likely that you would have been defaulting on your other monthly dues as well on your other loans and credit card outstanding. If the situation is really grave and there is no way you can personally work out a way of getting out of the mess then you could approach a professional debt relief company. They will evaluate your financial records, how much you owe and how much you earn so that they can chalk out a proper financial strategy for you.
The expertise of these agencies extends to negotiating with your creditors to bring down the debt level as well as the rate of interest. If there are too many creditors and you are finding it difficult to keep track of the monthly dues, they can also arrange for a consolidation of debt and leave you with a single amount outstanding and a single monthly payment to make. Considering your individual cash flows, they will be able to suggest a repayment plan that you can afford and that which enables you to retain your home and car, as well as pay for the essentials of daily life.
Author bio: Sam Adams is a lawyer who has had extensive experience of working with financial companies with large exposure to automotive loans. An expert of debt relief and negotiation, he writes extensively on the subject in various online media. Click here to know more about debt relief.