Your car is likely to be repossessed if you fail to make payments on the loan you have taken to purchase it. Whenever you miss a payment, a repossession agency is employed by the auto lender to cease the car and sell it at an auction.
Repossession can be a messy situation for car owners. Your credit score gets affected and your chances of getting a loan in the future will decrease. Relax, you don’t have to go through this. You can avoid such a situation by following the simple tips below:
Modify your loan
You may be finding it difficult to pay your loan. You can avoid a repossession situation by modifying your loan. You can ask your lender for an extension of the loan period so that you can spread your monthly payments over a comfortable timeline.
Refinance your loan
You can refinance your car if you feel your car will be repossessed. You may have experienced a pay cut or lost your job, but your credit score is decent. This is a good opportunity to refinance your loan.
Request a deferment
You can approach your lender if you feel that you will not be able to pay the loan. Ask for a deferment in the sense that you can skip a payment and adjust it at a later stage. There are lenders who agree to this and add the deferred payment to the end of the loan.
Declare bankruptcy
If the burden of debt is increasing and you are not able to pay your loans, you should consider filing for bankruptcy. You can file it under Chapter 7 or Chapter 13 of consumer bankruptcy petitions. Doing so will protect you from lawsuits and collection actions on the deficiency balance.
Sell the car
Lastly, you can choose to sell off the car and clear off your loan. It’s a good solution at times of financial crises, especially when you are unsure whether you can pay off the loan at a future date. Selling off the car will get your lender off your head and you can focus on meeting other financial commitments.