Communication Is Key It’s wise to communicate with lenders w..
Added 2021-11-14 17:09:57 +0000 UTCCommunication Is Key
It’s wise to communicate with lenders when you’re having trouble with payments. Doing so opens the door to alternatives, and voluntary repossession is just one alternative available. If you are proactive, you might find that your lender is willing to work with you. They’ll earn more if you keep the car—even if they have to modify the loan by lowering your payments or interest rate. Still, you might benefit more by giving the car back.
If you stop making payments, your lender will assume you intend to keep the car for as long as they let you. They’ll eventually send a repo man, and you’ll be stuck with all the costs. Even if repossession is your only option, it’s better to communicate.1
Third-party outfits promising loan modification sometimes can make things worse. For a fee, they might promise to lower your payments or otherwise improve the terms of your loan, but you can't be sure they're even following through on their promises unless you have something in writing directly from the lender. So, it's best to work with the lender yourself and steer clear of middlemen who might be scam artists.5
Selling the Car Instead
When your lender sells a repossessed car, it probably won’t sell for the best price possible. Lenders are required by law to get a decent or "commercially reasonable" price, but that’s probably less than you’d get if you sold the car yourself. Unfortunately, it may be difficult to sell the car.6
The challenge is that your lender has a lien on the vehicle, so you can’t transfer the title to a buyer until you get the lien cleared. To sell the car yourself, you’ll need to pay off the loan first—which is possible as part of a sale. Of course, if you had enough money to pay off the loan, you’d probably keep making payments. Selling the car on your own might be an option if you have cash available or a flexible buyer.7
