When your car is repossessed, you may not know why it happened to you or how you're going to get to work the next day. But you can recover by taking steps to take care of your transportation needs and protect your credit from further damage.
Some important tips for reprocessed cars:
Find Out Why Your Car Was Repossessed?
If you have fallen behind on car payments, you may want to know why your car was repossessed. Other times, it's not so obvious. In some states, not having insurance assigned to a loan or lease agreement can count as default and cause your car to be repossessed. Before jumping to conclusions, call your lender to clarify how you can straighten things out.
You can Get Approved for Auto Loans After a Repossession by calling (800)674-7799 or going to CPNGenerator
Find Out If You Can Get Back
Often, a bank or repossession company will let you get your car back if you pay back the loan in full, including all repossession costs before it is sold at auction. You can sometimes refinance the loan and create a new payment plan. In this situation, the repossession may not be removed from your credit report, but your new payment will usually be reflected if you work out a deal with your lender.
If the Car is Sold Then Ask If You Still Owe Money
When a bank or repo agency repossesses your car and sells it at auction, you may think you no longer owe money on it. That is not always the case.
Say a bank gave you a $10,000 car loan and you still owe $9,000 when you default. If the repossessed car sells for $7,000 at auction, you still owe $2,000 on the car in some cases and the cost of the repossess in some cases. This is called deficit balance.
Deficiency balances are very common, especially when your auto loan was for a new car. You can sometimes lose about 10% of the value of a new car just by driving it off the lot. Nevertheless, the lender or repossession company still must conduct the sale in a "commercially reasonable manner." If the repossessed vehicle sells for much less than fair market value, you may be able to dispute the higher deficiency balance in court.
If you completely ignore this deficiency balance, the account may be sent to collections. The creditor can also sue you for this balance, usually, if the debt is within the statute of limitations.
Accounts in the collection can stay on your credit report for up to seven years, so if you owe money, it's usually a good idea to pay off the balance to reduce damage to your credit.
Work on Improving Your Credit
A recovery typically stays on your credit report for up to seven years, so a large portion of your credit recovery is waiting for later. But you can be proactive in rebuilding your credit by paying your bills on time and working to pay off other debts. Thus, by the time your negative history comes off the record, your credit score will be much higher than before and you will be in a better position.
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