If you’re behind on your car payments, your lender may decide to repossess your vehicle. Repossession cannot only deprive you of your transportation method, but it can also damage your credit score. You may be able to avoid car repossession by taking certain steps.
Communicate With Your Lender
As soon as you think you might miss a car payment, reach out to your lender to discuss your options. Repossession is a costly process, so keeping your loan in good standing is a better option for both you and the lender. Depending on your situation and your lender, options may include a modified payment program, paused payments through forbearance, and more.
Refinance Your Loan
Refinancing your loans with a different lender may be work considering if you are behind on payments and repossession is a real possibility. When you refinance, your new loan will be used to pay off the existing one and you will essentially start with a clean payment slate. Just keep in mind that if you expect to continue to miss payments, refinancing is just a temporary fix and won’t help you with long-term payment problems. Consider it only if you’re confident you’ll be able to make your payments on time going forward.
Reinstate the Loan
If your loan is in default, but the lender hasn’t seized your vehicle yet, you may be able to reinstate the loan by getting caught up on payments. Even if you live in a state where the law doesn’t provide the right of reinstatement, your lender may allow the option to avoid further costs.
Sell the Car Yourself
If you sell the vehicle on your own, you may be able to get more money than what the lender would get if it sold the car at auction. Depending on the car’s value and how much you owe, you may even get enough to pay off the loan in full. This option may also provide you with enough cash to put a down payment on a new vehicle or resolve other financial concerns.
Surrender the Vehicle Voluntarily
If you’ve explored all other options and can’t find one that works for you, surrendering the vehicle will still hurt your credit score, but not as much as a repossession. Using this option, you take the car to the lender instead of waiting for them to come to you. Plus, if you owe more than the car is worth, a voluntary surrender may give you some bargaining power in waiving or reducing the amount you owe after the lender sells the vehicle.
Your Rights When It Comes to Repossession
Most states allow a lender to seize a vehicle at any time without notice, as long as it doesn’t do it forcibly, through the threat of force, or by removing it from a closed garage without permission. Some states require lenders to give you the time and place of the auction where they plan to sell the vehicle, so you can potentially buy it back. Laws differ depending upon where you live.
Call Us at the Hoverson Law Firm
An attorney at the Hoverson Law Firm can explain your rights in the state of Minnesota when it comes to vehicle repossession. If you are concerned that your vehicle might be repossessed, call us now at (612) 349-2728 for consultation.