Can a Bank Rescind on a Disbursed Loan? - The Bills.com Blog

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Can a Bank Rescind on a Disbursed Loan?

Question: Hi Bill, I have an auto loan as the begining of April 2008 and put $3000.00 as a DP. I had a job when I got the loan and lost it a week after and was laid off from the one previous and I am collecting unemployment presently. My question is can the bank recind the auto loan becuase I am unemployed? I can afford the payments even thoughI am unemployed.

Answer: Many contracts contain a clause that states the creditor can declare a loan in default if it believes, in good faith, that the borrower will not be able to make its future loan payments. However, I have never actually seen a lender declare a loan in default just because a borrower loses his job; the creditor has no incentive to repossess a vehicle as long as the borrower is making the regular monthly car payments. Your lender will almost certainly not care how you are making your payments, simply that they are being

made. As long as you can afford your payments, I do not think you need to worry about the lender trying to repossess your vehicle.

Since you have lost your job, you may wish to contact your lender to explain the situation and let them know that you will be able to continue making your monthly payments. This action on your part should prevent any future conflict with your lender about your withholding information regarding your ability to repay the loan. Communicating with your lender is not required, nor is it something that most people would do, but

if you are concerned about the lender finding out that you lost your job, it would probably be better for that information to come from you along with a commitment to keep making your payments.

For more information about auto loans, I encourage you to visit the Bills.com Auto Loans page.

I wish you the best of luck in your search for new employment, and hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com/blog

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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