Tips For Handling Your Creditors If You Fall Behind On Payments
Every year thousands of Americans fail to make payments on their auto loans. Once payments stop you might be lucky and only experience collection calls from your lender. For many failure to make a few payments on time means one thing; auto repossession. Soon enough the repo man comes calling, hooks up your car to the tow truck and hauls it away into the sunset. If this happened to you or someone you know, you are not alone, it happens to millions each year.
It does not have to be that way. You need not sit and wait for the repo man to come drive away your ride, you can actively do something about the problem. You can always take proactive measures that might result in you keeping the car or at least being able to salvage some of the equity you have in your vehicle.
The first step is to contact your lender. You have some reason you are behind on payments and staying quite about it is not going to help your case. Maybe you are ill or injured, or between jobs or suffering from a seasonal layoff, these things happen. If you have had a good payment record in the past with your lender then the lender might be willing to work out an arrangement to suit your financial needs at the time being. Your lender might be willing to lower payments or let you skip a few payments giving you time to get back on track. You must however contact them before they start contacting you about overdue loan payments. being proactive and upfront is not only the best policy here but it is also the way to get positive results.
Another option you have is to go for a loan modification or a refinance. This does not always work out, there are many variables at play here which would be another article in and of itself, but in some cases you can refinance your car not at a much lower interest rate which will mean lower payments, and this lower payment might be enough to keep you on track with your auto loan depending on your unique set of financial circumstances. You could also try to modify your loan with the lender for a longer loan length with lower payments, although this will result in you paying more in the long term, yet might help you avoid losing the vehicle altogether.
Another option you have is to sell the car and try to recoup some of your potential losses if the repo man is coming anyway and you have no other options. This works best if you have paid off most of what you owe on the car and also if the car is a newer model. This way you just might have some money left over and avoid a negative mark on your credit report, sure letting go of your car is not exactly fun but it could save you definite credit problems by selling it before it gets repossessed. You must however add a step here to close out the loan and transfer ownership to the new owner. You do this by doing an escrow transaction via escrow.com who can transfer your title and remit the payment to your auto lender to close out your auto loan. If you have a lease you can make use of a lease transfer service to attempt to avoid repossession and a negative mark on your credit report.
Basically any time someones car gets repossessed it actually is their own fault. Simply put there are plenty of things you can do to avoid all of this regardless of your current financial situation.
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