Advice on auto loan default
I defaulted on my auto loan. The bank sent me a notice demanding full payment. What can I do?
I defaulted on my auto loan, which has a $12,000 balance. The bank just sent me a notice demanding payment in full. 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 afford the payment again.
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 -- both the creditor and debtor lose money in a repossession.
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, I expect 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.
If you absolutely cannot afford to pay for the vehicle, consider voluntary repossession as a lower-cost alternative to involuntary repossession.
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