Our cars are a necessary extension of ourselves. But in these challenging economic times, it isn’t unusual to miss a loan payment or two due to one hitch or another. When you miss payments the lender can repossess your car. Having your vehicle repossessed, it can throw everything out of whack. When your car gets repossessed, you are likely to feel helpless especially if that is your sole mode of transportation.
Such situations can be inconvenient and frustrating to say the least. Title loan repossession laws vary by state, so you should look up what your rights are in these situations. Some of these laws include whether or not the repossession companies have the right to provide you prior notification, come onto your property to repossess the car, or cause damage during repossession.
If you are interested in avoiding repossession, your best bet is to proactively communicate with your lender and talk to them before it happens. Contact your lender any time you feel that it will be challenging to make payments. Vehicle repossession is a hassle for the lender as well and many lenders will prefer working with the clients to find a work around the situation. You and your lender can work together to develop a plan to catch up and bring your payments up to date. Here are a few options that you can consider to avoid repossession.
Refinance Your Loan
It may be possible to work with your lender and restructure your loan. It might be possible to lower the amount of your monthly payment by extending the overall term length. You can also go to a different lender and obtain a better rate and have them take over the loan.
Deferment Of Payment
A loan deferment allows you to pay a smaller payment, or skip a payment, for a designated period of time. You still have to make the payment at a later date, but a deferment gives some relief in the short term. By being proactive and communicating with the lender, you may be able to get them to agree to defer payments for a short period of time. This will give you the chance to get your finances in order and then make payments.
Trade Your Car Down
If you are having trouble keeping up with your car payments, it might be a good idea to trade your car in for a smaller, more affordable option. A trade-in is especially effective if the value of your existing car more than the balance you owe. You can also use the trade-in difference to pay off your loan if you have equity in the vehicle. A trade-in might lower your monthly expenses and help you avoid repossession.
Sell Your Car
Owning a car brings with it a lot more expenses than just the loan payments. These include, but are not limited to, insurance payments, fuel costs, maintenance, etc. If you sell your car, you can use the money to pay off your loan. It might be inconvenient in the beginning, but this solution it could allow you to get rid of your debt and save for another car in the future.