Not creation general payments could price you your van.
When you use for financing on a vehicle buy, your lender will viable stipulate that the vehivle itself serve as collateral on the loan. Thus, whether you accomplish your van payments on day, you obtain mini to agitation from your lender. Should you stop making regular loan payments, however, your lender reserves the right to seize the collateral in addition to using legal force to recover the balance of the loan.
Facts
Missing one car payment will likely result in a payment reminder from your lender in addition to a late fee. The action your lender will take after you miss a car payment depends upon your state’s laws and the details of your loan agreement. If you fail to submit the late payment or make payment arrangements, the lender will pursue more aggressive debt collection activity.
Effects
If your vehicle serves as collateral for the loan, your lender may repossess it. According to the Federal Trade Commission, most states permit vehicle lenders to repossess a car at any time after the borrower stops making payments. The lender must hire a separate company to seize the vehicle and, if necessary, track the car down. You are responsible for compensating your lender for any expenses it incurs when repossessing your car. These expenses will be added to your total car debt.
Misconceptions
Your lender can file a lawsuit against you for the remaining amount you owe on the vehicle loan after deducting the sale price of your repossessed car. It can then use the court judgment from the lawsuit to garnish your wages, seize the money in your bank accounts or even place a lien against your personal property and real estate. In addition, the late payments, repossession and judgment all appear on your credit report - making it challenging, if not impossible, for you to find financing for a replacement vehicle.
Considerations
The lender has the option to either keep your vehicle and accept the vehicle itself as payment for the debt or sell the vehicle at auction. Many consumers mistakenly believe that, once their cars have been repossessed, they no longer owe a debt to their lenders. Should your repossessed car bring less at the auction than you owe your lender, however, the lender has the option to legally pursue you for the deficiency.
Warning
Not all car loan lenders hold the vehicle as collateral for the loan. If your vehicle loan is unsecured by your car, your lender cannot repossess the car if you stop making the payments (See References 5). It can, however, hire a collection agency, make derogatory reports to the credit bureaus and file a lawsuit against you in an effort to recover the car debt. Like a lawsuit for a deficiency balance following a repossession, a lawsuit for an unsecured car loan can result in you being forced to pay off the debt via garnishment or property liens.
