Advice and guidelines on avoiding repossession
Avoiding repossession? Having a car repossessed can be consequential, as most people need a car for everyday use and repossession contributes to the negative information in your credit history.
Repossession: If you fall behind on your car payments, the company that financed the purchase of the vehicle is legally entitled to take it back without getting the court’s permission first.
Knowing the law: For specific information regarding the repossession of your car, how the process works, as well as repossession rights do the following:
- Find out about the law by contacting an attorney, research on the internet or contact an expert at Oyisa United Debt Specialists.
- Review the details of your car loan agreement.
Your loan agreement may give you the right to avoid repossession by curing the default.
Car auctioning: After a vehicle is repossessed, a lender stores it and arranges to sell it in a public auction.
When the vehicle is sold, the lender applies the sale proceeds to the clients outstanding car loan balance. If the proceeds don’t cover everything, the lender is legally entitled to ask the client to make up the difference.
Although the lender is legally obligated to sell the client’s vehicle for a “commercially responsible price,” the selling price is not guaranteed to cover the deficit.
It’s been my professional experience that this happens quite frequently; understand the credit provider is not looking out for your best interests in the sale.
Paying the deficiency: If the client can’t afford to pay the full amount of the deficiency in one lump sum. The lender may allow the deficiency to be paid off in installments, over a period of time.
If the client and the lender do come to an agreement about paying the deficiency, the client should not begin making payments until everything is in writing. If the lender won’t prepare an agreement, the client should write one themselves and send the lender a copy once the original has been signed and dated by the client.
Anticipating what happens if the client can’t pay the deficiency: If the lender refuses to let the client pay the deficiency through an installment plan, the client should not give into their demands, as doing so can jeopardize the ability to keep up with priority debts and/or most important living expenses.
By not giving in, the lender is left with the following options.
The lender can:
- Turn deficiency over to a debt collector
- Sue the client for the right to collect the deficiency. If the lender wins the lawsuit, it may ask the court for permission to do one of several things
- Put a lien on one of the clients assets, preventing the client from borrowing against it or selling it until the deficiency is paid
- Seize one of the clients assets, sell it and apply the proceeds to the debt
- Garnish the clients’ wages. The lender receives a portion of the wages for a limited period of time
- Write off the deficiency and report it as noncollectable to the credit bureaus it works with.
Getting your vehicle back: After your vehicle is taken and before it is auctioned off, a client has two options to try in order to get their vehicle back.
- Buy it back from the lender. Buying it back may make financial sense if the vehicle is worth more than the outstanding balance on the loan.
- Reinstate your car loan.Reinstating the loan means you agree to resume paying on it according to the original agreement.
Talk with an Senior Paralegal: OUDS has an in-house legal department, thus make sure to check the agreement with your budget and an OUDS debt specialist.
Avoiding repossession in the first place: Steps can be taken such as negotiating with the lender; selling the vehicle or even filing for bankruptcy is all worth considering.
Negotiating a way to keep your car: If your credit history is in relatively good condition and you haven’t yet missed a car loan payment, but you are worried about keeping up with those payments, you may want to approach your lender about extending the term of your loan (its duration) in order to lower your monthly payments. If the lender agrees, you will pay more in interest over the life of the loan, but that trade-off may help you keep your vehicle. OUDS will negotiate with your lenders on your behalf.
Giving Your Car Back Voluntarily: When you and the lender can’t come to an agreement on a way to keep your car, when selling it is not a viable option, you can just give it back to the lender. Doing so is called voluntary repossession. The main benefit is that you don’t have to reimburse the lender for the costs of repossessing the car. However you may still have to pay the lender for the costs of storing and selling it.
After you give your car back, the process works pretty much as if you lost your car in repossession.
In order to improve your financial situation, selling your car may be another option to consider. For more information, please read the following information:
Therefore OUDS is willing to assist consumers in this predicament with a free service of a financial assessment, assist the consumer to organise an affordable, realistic and structured monthly budget and debt management plan thereby providing consumers with a guideline for eliminating and remaining out of debt.
Oyisa United Debt Specialists is therefore committed to assisting consumers struggling to make their debt repayments and facing financial difficulties, to solve their debt problems and empower them to take back control over their financial situation.
With over 11 years of specialized experience in the debt & legal field Oyisa United Debt Specialists is committed to assisting South African consumers in financial liberation.