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Vehicle Repossession

Mark Cappel
UpdatedApr 3, 2024

I separated from my spouse and can no longer afford my Chevy Tahoe payments. Am I facing vehicle repossession?

I purchased a new Tahoe in November '09. I am separating from my husband and therefore, I will not be able to afford the payment. I have a 0% APR and my loan is for 72 months. The only thing I can think to do is to voluntary repo it. Do you have any suggestions?

The first reaction many people have when they cannot afford a vehicle's payments is to sell it. However, if the consumer borrowed money to buy the vehicle, the creditor almost certainly secured the loan by putting its name on the title. By doing so, the creditor has the right to repossess the vehicle if the debtor fails to repay the loan and prevent a sale of the vehicle until the loan is fully repaid. So why not just sell the vehicle and repay the creditor?

It is a virtual certainty that you are upside down on the loan. Almost every vehicle on the road today with a loan or lease attached to it is worth less than the balance of the loan. Why is this so? Unless a person has a loan with an unusually brief repayment period, vehicles depreciate at a rate that is faster than a consumer can pay off the loan.

According to a 2007 study by the American Automobile Association, the average annual cost of depreciation on a new vehicle is $3,392 per year. A new vehicle loses 15% to 20% of its value the moment a consumer buys it and turns it into a used car. Therefore, buyers who borrow money to buy or lease a vehicle should expect to be upside down for the duration of their loans.

Here, your financing terms are unbeatable -- a six-year loan at zero APR for a vehicle is amazing. You cannot refinance to get a better rate because a better loan does not exist. Your problem is the balance, the sales price, is simply too high.

If you cannot repay the loan on the vehicle you have three choices:

1) Do nothing, and eventually the creditor will hire a vehicle repossessor to take the vehicle from you. This is the least desirable option because the repo man will probably take the vehicle at the most embarrassing or inopportune time. This is also the most expensive option for you.

2) Return the vehicle. This is known as voluntary vehicle repossession. See the resource All about voluntary repossession to see an extensive discussion of this option. This is not a great option, but it is the most likely unless your income improves and you can afford the monthly payment.

3) Try to negotiate different terms with the creditor. I am very pessimistic about this option. However, it is worth making one phone call to the creditor to see if there is any hardship program available for people in your situation.

Vehicle repossession is unpleasant, but if you cannot afford the terms it is your only option.

I hope this information helps you Find. Learn & Save.



Struggling with debt?

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Housing debt totaled $12.612 trillion and non-housing debt was $4.891 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Collection and delinquency rates vary by state. For example, in South Dakota, 18% have student loan debt. Of those holding student loan debt, 5% are in default. Auto/retail loan delinquency rate is 2%.

While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.



SSammy, Mar, 2012
How can I find out Repo laws for the state of Vermont for 2008? Im being sued now and as a military family we were moved on orders and I lost my job and couldn't find work to pay for our vehicle so food on the table was more important and my car was given back to lender. Im now being sued in 2012. Question, In Vermont dont they Ford Motor Credit have to inform me of location, date and time of sale of vehicle? They did put military duty on credit report, but are still suing us. Help.
BBill, Mar, 2012
Consult with a Vermont lawyer who has consumer law experience to learn 2008 and present repossession laws.