Will I still owe money to my loan company, if I return my truck to them?
I have a truck I used for work. I have no more use for the truck and can't afford to finish paying for it. I want to turn it back for repossession. Is there anything that the loan company can do to me, like come after more money after they sell it. I still owe about $18,000 on this truck with 518,000 miles on it.
When a vehicle is repossessed (through a voluntary surrender or otherwise), the lender will usually sell the vehicle at auction, and then apply the money received at auction to the balance owed on your auto loan. If the lender receives less money at the auction then you still owe on the vehicle (as often the case). The difference is called a deficiency balance. Generally speaking, you would be liable to the creditor for the deficiency balance, which means you will probably still owe money to the creditor even though you no longer have the vehicle. The creditor may be willing to negotiate a repayment plan or lump-sum settlement with you to repay the deficiency, but if you fail to make arrangements with the creditor, the creditor could sue you to obtain a judgment against you, which could result in wage garnishment, a lien on your property, and/or bank levies, depending on the laws in your state.
Because deficiency balances on automobile loans can cause a significant financial hardship and have a strong negative impact on your credit score, you should work diligently to prevent the vehicle from being repossessed, if at all possible.
Keep in mind that most lenders do not want your car, they want the money, so first contact your creditor to discuss payment options, such as deferral of payments. If the lender will not work with you, you may want to look for ways to borrow the money needed or, if possible, to refinance the loan. (Most lenders won't refinance their own auto loans, so don't be discouraged by your original lender's refusal to do so. Typically auto-refinancing is done through a different lender, using the new loan to pay off the original loan.)
If you cannot borrow the money to repay your missed payments, or if you cannot afford to continue making your regular monthly payments, you may have no choice but to allow the car to be repossessed. In that case, you should contact an attorney to discuss the laws in your state regarding the collection of deficiency balances, and what options are available to you to resolve the debt.
Finally, you can visit the bills.com Auto Loans Information page and Refinance Car Loans page for more information on auto loans and refinancing. You can also used the site's Saving Center tool to apply for a free loan quote from a pre-approve lender.
I wish you the best of luck in resolving this financially difficult situation, and hope that the information I have provided helps you Find. Learn. Save.
Did you know?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q2 2023 was $17.06 trillion. Student loan debt was $1.569 trillion and credit card debt was $1.031 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in North Dakota, 16% have any kind of debt in collections and the median debt in collections is $1866. Medical debt is common and 7% have that in collections. The median medical debt in collections is $629.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.