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However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. Your credit will still take a hit, but it might be slightly smaller than with involuntary repossession — and can save you fees. To surrender your vehicle, inform your lender you can no longer make payments and intend to return it. Upsolve Community Member Why would my car loan be removed from my credit report as I have retained Generally, the first thing paid is the cost of selling the car at the auction and the cost of car repossession.
This includes: the costs of towing and the tow truck while the repo man does his job, storing the vehicle before auction, and attorney fees for the loan company. After these costs are covered, the loan company needs to use the rest of the money to pay down the auto loan. This money is used to pay fees for late payments, interest on the loan, the loan balance, and any other penalties from the loan company.
You still might owe the loan company some money. This difference is the deficiency balance. There is no personal property, house, or car that can be taken. While it may take a while before your loan company does anything, the loan company can take legal action by suing you for this money.
Sometimes, people are able to negotiate monthly payments with the loan company to avoid a lawsuit. With this judgment, you might have to deal with wage garnishment each cycle before your paycheck hits your bank account.
Additionally, deficiency judgments do affect your credit report and can lower your credit score. This sounds like a good deal, but it might be too good to be true. If you owe more on your old car than it is worth, the car dealership will add that difference into your new loan.
You might be looking at higher fees, a higher principal, or a higher interest rate. You might have much higher monthly payments than you did before because of this negative equity. This might not be manageable in the long run.
You may have to deal with the loan company repossessing your car. And this judgment also goes on your credit report. Hey, the hits just keep on coming! Well, just about anything but this. You could have sold the car yourself and gotten much more than the car will realize at a bank auction. I know that if you are upside down on your loan , this might be a problem. But you need to think long and hard about this. Is there any way you can scrape up the money necessary to get yourself out from under the loan?
Can you borrow it from friends or relatives? If — and I still say you need to do what you can to avoid this — If the repossession really is unavoidable, then cooperate with the bank. Bring it to them and keep it clean. It is out of date. It is too much to read.
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