HOW TO AVOID REPOSSESION OF YOUR CAR

Many have lost jobs during the 2009 recession and are wondering what they can do to avoid having their car repossessed. Lenders want to hear from you, as they are really eager to repossess cars.
Know the law in your province regarding repossession of vehicles.
Pick up the phone, be proactive call the lender and explain your financial situation.

The lender may be able to:

• Change the due date
• Defer payments and tack it onto the back end of your loan
• Relief through insurance

Worst case scenario. A collection letter is the last step before repossession.
The letter may ask for the full outstanding balance, pay off due balance and any other fees associated with repossession.
Once the car has been repossessed the car will be sold to the highest bidder, this does not mean you are no longer responsible for the debt.
The lender will get a deficiency judgment against you, giving it the right to continue to collect on the debt. This judgment will reflect as a bad mark on your credit report.

Long Term Repercussions. In addition to losing your car may be the damage that missed payments or repossession can do your credit rating. Creditors will report the borrowers activity on a monthly basis, so even one payment over 3 days late can affect your credit score. Positive about monthly credit reporting is that once you resume regular, timely payments the activity will also be reflected in your credit report.

To avoid missing car payments, follow these suggestions:

1- Read and fully understand your car loan contract. Know and understand your payment due date, interest rate, length of the loan and what late service fees will be added on for past due payments.

2- Keep your debt in line with your income.

3- Prioritize your finances.

4- Contact a not-for-profit credit Counselling agency near you, if your debt load becomes overwhelming.

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