How to avoid a repo when you can’t make a car payment


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How to avoid a repo when you can’t make a car payment

(Cars, Credit and Money Matters) Permanent link

David, an All Consuming reader, recently wrote for advice: “I cannot make my car payment. If I pay the interest and a little towards the principal, can I keep the car until I get back on my feet?” Attorney General Rob McKenna response is below.

Unfortunately, if you don’t make your payments, your lender may repossess your vehicle – and your blemished credit history can make it difficult for you to obtain another loan in the future. Plus, you will still owe the remaining balance on the vehicle you no longer have. Here are some options that may help you avoid a repo:

Contact your lender as soon as possible. Be honest about the situation and why you aren’t able to make the payment. If you’ve been a good customer and made your payments on time in the past, your lender may be willing to defer a payment and allow you to keep the car. If you can reach an agreement to change your original contract, get those new terms in writing. Don’t wait until your loan has been turned over to a debt collector. By then, your lender has given up on you and it’s too late to negotiate.
Refinance. You may be able to negotiate a lower interest or spread out the payments over a longer period of time, resulting in lower payments. The downside to a longer-term loan is that you’ll pay more interest. Compare loans from your current lender and others.
Sell the car to pay off the loan. Determine how much you owe on the vehicle then check its market value on a site such as Edmund's or Kelley Blue Book. If you owe less than the car is worth, sell it and use the cash to clear your debt. Before selling, review your financing agreement to see if the lender charges prepayment penalties for paying off your loan early.
Look for ways to save more money. Are you positive you can’t make your payment? You may be able to cut household expenses by eliminating other services you don’t need. You might qualify for assistance programs to help cover groceries, utilities or prescription drugs. Check out our Recession Survival Guide for resources at www.atg.wa.gov/economy.aspx.

You may also benefit from credit counseling. A legitimate credit counselor can help you regain control of your finances by designing a realistic budget that allows you to pay off your existing debts, cover your everyday expenses and save for the future. For a referral to a local credit counselor, call 211 or visit the National Foundation for Credit Counseling Web site at http://www.debtadvice.org.

Be aware that your lender does not have to notify you before your car is repossessed. Even if you return the car voluntarily, you still are responsible for paying any outstanding debt on the loan, as well as the lender’s cost of the repo, and your creditor still may enter the late payments or repossession on your credit report. For more information about what happens during a repo and your consumer rights, see our Web site at www.atg.wa.gov/repossession.aspx.

Consumers can reduce repo risk by carefully considering how much car they can afford prior to making a purchase. You can find tips to help with your car purchase decision on our Web site at http://atg.wa.gov/car_buying.aspx.

Posted by Sarah Lane All Consuming Blog Moderator at 10/26/2011 04:27:17 PM |

I have recently been laid off and require a car to look for work. Is there a program where the government could pay for my monthly car payments until I am employed again?
Posted by: steven holtz ( Email ) at 9/28/2009 9:48 AM

Steve, I'm sorry you lost your job. I’m not aware of any program that will pay your bills for you. However, you may be able to meet with a credit counselor and work out a payment plan. Credit counseling services often arrange for consumers to pay debts through a debt management plan. You deposit money each month with a credit counseling organization, which then uses those deposits to pay your bills and loans according to a payment schedule they’ve worked out with your creditors and you. The National Foundation for Consumer Counseling provides a list of member agencies at www.nfcc.org or call 1-800-388-2227 for 24-hour automated office listings. Also, you may be able to deduct certain costs associated with your vehicle in conjunction with your job search. Check with the IRS. Finally, if you don’t already have a car or need to sell yours, you might look into using a car-sharing program to save money.
Posted by: Kristin Alexander, All Consuming Moderator ( Email ) at 9/29/2009 4:36 PM

I am in the same situation, I tried calling the creditor to let them know I would be paying the loan 34 days late. They would not under any circumstances allow me to do so and they said they could then come and get my car. I asked them if they really wanted a 10 year old car with over a 130,000 miles and they said they sell them at auction every day. I have had good payment history with this company for 6 years and I can not sell this car ( I owe more than it is worth) or refinance ( to old). So nice of my bank to try to work with me. Ps when we bought the car we were making $2000 more per month than now so at the time the monthly cost was small. Now we are trying desperately to stay afloat. No wonder the banks are failing, they will not work with their customers, they would rather repo or foreclose on their property.
Posted by: Amber ( Email ) at 1/26/2010 6:40 PM

This is regarding the notice on the AG facebook page:
'AG’s law enforcement bills still alive – for now '
I am really glad to hear that the AG's office is making consumer protection law improvements. Especially as it pertains to used car dealerships. We had a used car dealership manager explain to us over and over that Washington state does not have a right to riscind law so we had to keep the un-safe used car at our own risk even though we had brought it back to the dealership within 24 hours after driving it off the lot. Washington State's consumers need to have laws created for protection that has not in the past been afforded to us by the law. If at all possible, could the attorney generals office possibly look at creating a crearly read credit card statute of limitations law? Currently it can be read as either a 4 year term or a 6 year term. This would assist the consumer if this could be a bit clearer.
Thank you for your efforts on behalf of washington state consumers,
-JJTA800
Posted by: JJTA800 ( Email ) at 2/8/2010 9:28 AM

A few years ago the car dealerships were offering credit to just about anyone regardless of their credit situation. Many were buying cars that were more than they could really afford. A loss of a job or even an cut in income has made a huge difference in lifestyles today.

Individuals should look at their finances before taking on the burden of a hefty car payment each month. If you don't make your payments, your car will be repossessed. It's as simple as that.
Posted by: Jeannie Harris ( Email ) at 11/9/2010 8:08 AM

I purchased a car and a 6 months later found out that they company i purchased it from had sold the contract. However, that company or the new company has not contacted me. I made a payment to the original company and we call the person to whom was suppose to have the contract claimed they don't have it. And i only owed 1200. left of the contract made a 100o payment and the original company told me they had to find out where the contract is. So i had not been making payments cause i believe i owe them nothing. But i think they are going to try to make me pay more. So the question is what is my rights as far as getting the title for the car without making another payment if possible. [ALL CONSUMING RESPONSE: Diane -- I'm confused. Are you saying you made all the payments under the original contract and now someone is asking for additional money? Or that you only made some payments? I suggest filing a complaint with our office if you believe you are being charged for payments beyond your contract terms.]
Posted by: diane ( Email ) at 7/7/2011 11:14 PM

I have a car loan through a bank that is not around here at all, they say I can make my payments through wells fargo. I made my payment on July 1 and July 14th I got a ball from a repo agency saying they were coming to get my van. So I called my loan company and told them that the payment was made on th 1st they said that I needed to fax a copy of my reicpt to them and they would research where the payment went. But they could only put a 24hr hold on the repo and it could take up to 5 buisness day and if they showed up to repo in that time frame then I would have to deal with the extra cost. I do not see how this is legal seeings how Ivsent them the proof I made my payment.
I also was wandering how late a payment has to be before they can repo your car? I am new to Washington and I know in Oregon you have to be atleast 3 monthes past due. [ALL CONSUMING MODERATOR'S RESPONSE: I can't give you a legal analysis on this blog but would advise you to check your sales contract for information about late payments. If you have a specific issue to resolve, please file a consumer complaint. Thanks.]
Posted by: kris ( Email ) at 7/15/2011 12:06 PM

I recently had a reposession I have pulle dmy credit report and it is not listed yet my finance company is letting it bill out and showing another 30 late paymtn when I dont have possession of the car. How long can they let the account bill out and age on my reprot [ALL CONSUMING RESPONSE: If you have paid more than 60 percent of the amount of the loan, the creditor must sell, lease, or otherwise dispose of the item, unless the consumer signs a statement after the default which permits the creditor to keep the item in full payment of the loan. The sale must be held within 90 days of repossession. You must be notified of the time and place of the sale.

If you have paid less than 60 percent, the creditor may decide if the item is to be kept as payment for the loan or sold. You must be notified in writing by the creditor of what will be done. If the creditor chooses to keep the article, you have 21 days to protest in writing and demand the item be sold.

The proceeds from the sale go to cover the balance of the loan, and the costs of the sale and repossession. Any money which remains is returned to the buyer. If the proceeds of the sale do not cover the loan and expenses, the repossessor is allowed to sue the buyer for the full amount owed including repossession fees, auction costs and legal fees.]
Posted by: SANDRA ( Email ) at 7/25/2011 7:26 PM

I was laid off and unemployed for the past two years. Now, I am extremely behind on my car payments. Recently, I found a new job and can afford my payments but wondering is there some type of help out there in getting me back on track for me to keep the car.
Posted by: Jennifer ( Email ) at 3/11/2012 1:17 PM

Well I put myself in a situation I'm not proud of. I have an auto loan that I haven't paid in about 8 months I believe. What can they do and what can I do to save my car cause I need it for work and care for my daughter.
Posted by: Dave ( Email ) at 3/29/2012 11:14 AM

I had my monthly buget figured out to pay my car payment,then my daughter thats 12 her Father raped her,so now I don't recieve any Child Support. My only monthly income is Social Security,tried to find any loop holes to pay my past due payments,I really need some help or solution to keep my only car.
Posted by: Linda ( Email ) at 7/5/2012 8:53 PM

I have just switched from temp to perm at my job and have fallen behind on my car payment due to haveing to put a week in the hole to get my check. Can anyone hlep me in finding some assistance in car payments?
Posted by: Dewayne ( Email ) at 8/4/2012 7:36 AM

I purchased a car for a certain amount for 72 months. I lost my job an deferred a couple of payments on top of a few late payments. My interest rate is 14.5%. I called on the payoff an was told I still owe 17k on the balance an 34 payments left. I asked how an I was told that is the balance. I went to a dealership an they pulled my payoff had the same payoff amount but showed I've made 47 payments at $622.00 that I couldn't have 34 left. I called the finance co an they said I don't have a set interest rate it's a flexible interest an when I deferred the payments they charge me interest until the payments are made. Now what was the benefit to deferring them an I now owe an additional 9000.00 on this vehicle an they won't work with me or provide me anything saying my contract says its flexible interest
Posted by: Kelli jones ( Email ) at 8/23/2012 2:48 PM

I lost my job due to illness after only having my car 1 month. The same day I lost my job, my 15 y/o brain damaged daughter was sexually assulted. My stress level has made my physical illness worse. My spouse is disabled and I am applying for dissability so I can get my health better and go back to work. I am the only earned income in the family. Our income now will only cover rent and most of the bills but not the car or insurance or food etc... What is the best course of action for me to take to handle not being able to pay the car loan and insurance when It will definately be at least 2 to 3 months before I can afford it again?? [ALL CONSUMING MODERATOR'S RESPONSE: You should contact your finance company and inform them of your financial situation and see what options there maybe for you. Also, you should contact your insurance company and ask them about any money saving options they have. You can also call “211”, your Mayor’s office about temporary financial assistance, services offered in your city/county etc.]
Posted by: Devistated ( Email ) at 10/28/2012 12:23 PM

We purchase a car right before the claspe. The car loan was sold to Wells Fargo and we were not told. Wells Fargo was not informed I am assuming that we were still making monthly payments to the bank who sold our loan. Well Fargo put the car on our credit as a charge off never paid. We paid $7,000.00 dollars in payment. What can we do? [ALL CONSUMING MODERATOR'S RESPONSE: You should have received a notice in the mail from both the original bank and from Wells Fargo regarding the sale and once completed, the original bank should not have accepted any further payments. You should dispute the credit reporting with the credit bureau and then file a complaint with our Consumer Resource Center at: https://fortress.wa.gov/atg/formhandler/ago/ComplaintForm.aspx against both the original bank and Wells Fargo.]
Posted by: Cathy ( Email ) at 10/28/2012 4:04 PM

I was laid off from my job in May 2012. I notified my lender that I was under an L & I claim and receiving unemployment. They agreed to give me a one month extension. Before the month was over, I received more documentation from L&I, stating I was disabled. I called the lender,went to the business location numerous times and asked for the full loan agreement and all payments made on my car loan and a balance. To this date,despite asking, I have never received this information.In a phone conversation with them in July,they agreed to give me 2 additional months grace period. In August of 2012, I moved to Colorado. I had spoken to lender,sent letters and emails of my new address & contact info.I attempted many times to contact them and retrieve my information regarding this loan, to refinance or to create a reasonable amount of repayment. They repeatedly transferred me over to others who all told me different things. On October 20th,2012, My car was towed from my carport in Colorado and repossessed. When I called the credit union, they said I needed to apply for a personal loan to recover or pay it off. I applied for the loan which they denied (because of late car payments!)and to this date, Nov. 14th,2012, I have not received per fair credit act,any documents nor notices involving the repossession or denial of my loan application. Does anyone know if I have legal remedy,in this instance? Thank You [ALL CONSUMING MODERATOR'S RESPONSE: If the credit union that financed the car is Washington based, then you can file a complaint with our office at: https://fortress.wa.gov/atg/formhandler/ago/ComplaintForm.aspx and we can try to get your questions answered and mediate a resolution. If the credit union is not Washington based then you will need to file a complaint with the Colorado Attorney General at 303-866-5219.]
Posted by: P berry ( Email ) at 11/14/2012 2:04 PM

My car loan bank wont take my payment. we r 2 mnths behond but have been keeping up on the 3rd payment. Can they do that? [ALL CONSUMING MODERATOR'S RESPONSE: It is fairly standard in car loan contracts that once a consumer is in default, the bank can refuse any future payment.]
Posted by: Jessica ( Email ) at 12/10/2012 7:22 PM

I was 2 months behind in my payments going on 3rd month (I have a 10 day grace period from my due date) I paid the last two months late payments they still repossessed the car. Is that allowable? I know I was late I was unemployed and homeless however can afford payments again and have a roof over my son and I head again. Thanks to god. [ALL CONSUMING MODERATOR'S RESPONSE: A grace period generally refers to the time before a late charge can be added to the payment and/or reported to the credit bureaus. A car can be reposed 1 day after the payment is due. We would suggest that you contact your finance company with your current financial information and request that the car be returned and the contract continued. If the finance company agrees, you will most likely have to pay the repossession costs, legal and/or storage fees that were incurred. If the finance company does not agree, then they must notify you within 21 business days of what will be done with the car either kept as payment in full or sold. Note if the car is sold, you may be responsible for any residual amount of the contract, legal or storage fee, repossession costs. You can at any time prior to the car being sold recover any personal belongings left in the car. If the finance company will not respond to you, you can file a complaint with our office.]
Posted by: Deborah ( Email ) at 1/19/2013 6:50 PM

i have bad credit and missed 2 payments on my 2005 gmc truck. i really want to keep my truck but its hard when im going back and forth for a pinched nerve in my back and paying emergency rooms for my visits, come to find out im probably go through surguryand thats will cost. what can i do , im trying to refinanceanyone i can refinace through, help me [ALL CONSUMING MODERATOR'S RESPONSE: You can try to work out a re-finance agreement with the finance company, lengthening the loan to reduce your monthly payment, and/or cancel any optional services. Our office cannot recommend a specific finance. You may also want to ask friends or family who they would recommend or talk to your bank or credit union about any options.]
Posted by: william ( Email ) at 2/5/2013 8:58 AM

I am 19 and with the co signing of my dad I got a 2011 Nissan Altima. Following that which was 5 months ago I had went through three job changes I moved to a different city and recently to a different state. The state where I moved has a lower minimum wage and I cannot afford my car payments. I don't have much bills but with my nearly 2 dollar change in pay rate I am left with nothing. Well besides that I did my research and the car was sold to me way above Kelley blue book price. And I am stuck and really need toget rid of this car. What do I do that wont have me paying more and not having a car [ALL CONSUMING MODERATOR'S RESPONSE: You can try to work out a re-finance agreement with the finance company, lengthening the loan to reduce your monthly payment, cancel any optional services, and/or speak with your dad about some temporary help until your financial situation stabilizes or improves. If you are considering repossession either voluntary or involuntary, the finance company will hold both you and your father responsible for the contact plus collection, repossession, and/or attorney costs. Unfortunately, there are not a lot of options in this situation.]
Posted by: Adrian ( Email ) at 2/16/2013 5:55 PM

So I'm about to start a new job and got behind on my car payment because I was laid off. My question is if I just moved in to a new place and did a change of address, will they be able to see where I moved to in order to repo the car? Reason I ask is because as soon as I get my first paycheck, it's all going to be paid and up to date. If they can then I'm just going to tell my last roommate to leave a letter in the mailbox saying I don't live there any more until I get my first paycheck. [ALL CONSUMING MODERATOR'S RESPONSE: Generally when someone changes their address and fills out a form at the Post Office, that information is placed on the envelope and if returned the sender would see the change. You should contact the Post Office to see if any other information is available to the public. We would suggest that you talk with the finance company and let them know the plan to bring the car current, if that isn’t an option you should contact a private attorney for advice.]
Posted by: Aaron ( Email ) at 4/5/2013 6:31 PM