Your Basic Rights when Faced with Car Loan Repossession

Your Basic Rights when Faced with Car Loan Repossession

When you take out any loan for a new or used car you will sign a contract to repay the loan at a certain rate over an agreed period of time. Within the loan contract there will have been information regarding any defaults in payments and the possible consequences. The main consequences, being the risk of a car loan repossession. This is part of the lenders security that you will repay the car loan exactly as you have agreed when you accepted the contract. If you do not stick to the agreement, then the lender will have the legal option of repossessing the car in question.

Car loan repossession is a big fear for borrowers and will usually help them keep their payments up to date. The best advice if you start to fall behind with payments is to keep your lender informed of any problems. Sometimes payments can be deferred for short periods or the repayment period can be extended in order to lower payments. If you want to avoid car loan repossession then always keep in touch with your lender if you cannot pay on time. Lenders do not like to repossess cars; it is often a last resort, so they will be sympathetic if you communicate with them.

Communication with the lender will be viewed as a positive attitude and responsibility towards your debt. Car loan repossession is often not necessary if the borrower is not refusing to pay but merely having repayment issues. It is only usually when the borrower ignores reminders for payments or fails to offer explanations for non payment that the lender is forced to take action.

If you are ultimately and unfortunately faced with car loan repossession then you do have a few basic rights. Usually you can delay the lender from repossessing the car until they have obtained a court order for car loan repossession. If you keep your car secure in a locked garage until the court order comes through, then the lender cannot break in and take it. If they do this, then it will be looked upon very unfavorably by the courts and could quite often discredit the case. Also if you have made previous arrangements to catch up with your payments, then this will have dissolved the original contract. A new contract will have been formed. This is why it is always in your best interests to keep communication open.

If you have done everything you can to avoid car loan repossession then it may be better to allow the lender to take the car with your permission. If the lender does not have to pay out for court expenses, then those expenses will not be added to your court judgment. A reference to car loan repossession can remain on your credit record for many years. This can greatly hinder attempts to obtain credit in the future. It is a last resort for lenders and should be a last resort for borrowers too so it should and can be avoided.

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