If you need your vehicle to get to work or to take care of your personal responsibilities, it can be upsetting to know that someone is trying to repossess it. You may have fallen behind on your bills or be struggling with debt, but you may still need that vehicle to help you in your day-to-day life.
If you believe that your vehicle is going to be repossessed, there are actions you can take right away. For example, you may reach out to the lender to explain your situation. They may be willing to work with you on a payment plan or give you a break for a month or two while you try to balance your financial situation. Why would they do this? Most lenders don’t want to see people default, but they also don’t want to have to go through the effort to repossess a vehicle.
Communicating with your lender is key
To avoid trouble, the best thing you can do is to communicate with your lender as soon as you can after missing a payment. You may also want to look into refinancing your auto loan. In some cases, especially if you have good credit, you may be able to get a lower monthly payment and lower interest rate. Both can help you get more control over your expenses.
If you know you can’t avoid missing payments, it may be time to sell the vehicle yourself if it’s worth more than you owe. That way, you’ll walk away with cash and can avoid a repossession on your record.
You may also want to surrender the vehicle to the lender. While this will hurt your credit, it’s still better than allowing a repossession to occur.
If you know you need your vehicle and a repossession is likely, those options could help. If not, the last method would be to go into bankruptcy. A bankruptcy may help you get other unsecured debts under control and give you some leverage to negotiate with the lender holding your auto loan. In some cases, you may be able to reduce your debt enough that you can reaffirm the auto loan and keep your vehicle.