It took a lot of thinking before you decided to take out a car loan but after paying for a few months the car is now in danger of being repossessed. This is the problem of a lot of people who opted for a car financing scheme. Banks and financing companies have so many repossessed cars and the number is increasing each year. If you are in this situation, what are your options to prevent your car from being repossessed? The following tips can help.
Pay the amortization
This of course is the first solution that must be looked at. Find a way to pay the arrears in monthly payments. It could help if you can borrow from relatives with no interest charges. It is not advisable to get a loan from a financing company because you will have to pay interest and this will add up to your money troubles later.
Find another source of income
Even before the car becomes in danger of being repossessed, you have to find an additional source of income that can help in paying for the loan. It could be a home-based money maker or your spouse getting a job to help in paying.
Ask for re-structuring of the car loan
Talk to the financing company or bank and ask for a re-structuring of the loan. Longer payment terms can help lower the monthly installments. This approach can help cushion the impact on your finances. Some banks may not agree with a restructuring offer especially if you only paid a few months but if you are willing to accept higher interest rates, they may just agree.
Sell the car
This is another option that can help you in getting rid of the problem. Sell the car and let the buyer continue the payment. You just have to put it in writing that you are relinquishing the rights over the car so the financing company will issue the registration in the buyer’s name when the payment is completed. This way, you get to have money and not just allow the car to be repossessed without you getting anything in return.
This is one of the last options that you have as a defaulting debtor in a car loan. Filing for bankruptcy and making use of Chapter 7 or 13 of the bankruptcy law can help in preventing the company from repossessing your car. Just get a lawyer knowledgeable in bankruptcy laws and you can prevent your car from being repossessed at least for the time being or even for good in some cases.
Hide the car
When your car is in danger of being repossessed, you have to consider hiding it for the mean time that you are looking for a way to pay for the arrears. You must have the intention to pay though because you cannot hide the car forever. Also, the name in the registration is still that of the company or there is a note in the registration that it is encumbered.
A lot of people made the mistake of getting a car loan when their finances dictate that they should not. It is not easy to entertain the repo man in most cases so you have to consider some or all of the tips given here to prevent your car from being repossessed.