Car Repossession: How it works

Man holding car keysMany Americans depend on a car for transportation. Whether it’s used for work or play, the automobile is a staple in American society. The 5-to-7 year car payment is a regular item on the household budget nowadays and making your car payment is important. Failing to pay your monthly car note can result in having your car repossessed, but it’s not the only way for car repossession to take place.

Depending on the creditor, there are several scenarios that could result in car repossession. Let’s say you need your car repaired to the tune of $2000. You take your car to the repair shop, but don’t have enough money to get it out. Weeks pass by and the mechanic hasn’t heard from you. They call the creditor. In order to avoid a mechanic’s lien on the title, the creditor may elect to repossess the vehicle. Now if you want the car back, you have to pay for the cost of the repairs plus the amount associated with towing and storing your car. What if you were current on your monthly car note?  It doesn’t matter. Once the creditor has to “retrieve” your vehicle, your car has officially been repossessed. As with any loan, you can always make good on it by paying the fees and getting your car back. If you don’t, the vehicle goes off to the auction and the creditor tries to recoup some of its losses.

Another scenario involves getting your car towed and placed in the city or county impound. If you are current on your car payments, surely your car won’t be repossessed from the pound, right? Wrong. In this case, car repossession is an option for the bank, as well. If your bank decides to leave the car impounded, it’s up to you to get it out while continuing to pay your car note. If the bank picks your car up, you must pay the fees and storage costs to get your car back. In this instance, you are sometimes given the option to roll that amount into your loan. Either way, you have to pay the piper to keep your car.

The obvious answer to keeping your car from being repossessed is to stay on top of your auto-related expenses. However, things pop up and before you know it, there is more month than money in your budget. Call your bank and tell them what’s going on. They may have a solution to keep you from losing your car. In the case of car repairs, check into a vehicle service contract. These contracts cover a large amount of car repairs that could save you a large amount of money. Online lenders like RoadLoans offer a vehicle service contract for only a few dollars a month when you purchase a vehicle. If your monthly car payment is a budget buster and is just too high, RoadLoans can help there also. The online lender has several auto refinancing options that can put money back into your pocket.

The key with car repossession or any another loan-related issue is to be proactive instead of reactive. Taking that first step may be difficult, but in the end, you save yourself a lot of money.

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