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Advice on auto loan default
Question: I have defaulted on my auto loan for $12,000 dollars. The bank just sent me a notice demanding payment in full by July 7th. Is there anything I can do to avoid paying this full amount, as I don't have the money to do so? Is there a way I can work something out to continue making payments? I was jobless for a month, but can now afford thepayment again. Thanks!
Answer: First, you should call the bank to discuss the options available to bring the loan current. Now that you have found a job and can afford the make the payments going forward, I would be very surprised if the bank is not willing to work with you in catching up on the payments. Since you were only out of work for one month, I assume you only missed one or two payments, so bringing the loan current should not be too difficult. Again, I would be very surprised if the lender is not willing to work with you in resolving the default - they lose money when they repossess an auto for an auto
loan default.
If the lender is not willing to work with you, the only alternative I can see would be to borrow the money to bring the loan current. Depending on your credit, you may be able to go to your bank or credit union and ask for a small loan to repay the missed payments. If your credit is problematic, you may need to ask your family and friends for help bringing the auto note current. If the vehicle is repossessed, you will not only be without a vehicle, but you will probably also still owe the finance company a lot of money as a deficiency balance. When a car is repossessed and sold at auction, the finance company
applies the money it receives at the sale to the balance owed on your loan. If the vehicle sells for less than what you owe, you may be left owing the difference. As I mentioned before, I expect that your finance company will work with you to bring this loan current, but if they will not, you should explore all options to borrow the money to bring the loan current, since a deficiency balance can be a huge financial burden.
I wish you the best of luck in resolving this problem, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by William Lockridge on Sunday 9th December 2007 08:00
I defaulted on an auto loan 18 months ago and the bank wrote off the note as "uncollectable." I still have the car, but how do I obtain the title? Thank you.
2. Posted by Park on Monday 10th December 2007 11:12
Thank you for visiting the Bills.com blog page. The bank writing the car off as uncollectible is mainly done for tax benefits. At any time, within the statutes of limitations, the bank still has the right to collect on this bad debt. Just because the loan was labeled uncollectible on your credit report does not mean you have the right to the title. The title will remain with the bank until the loan is satisfied.