There are numerous auto loans in Canada that you can use, but failure to stick to your payment plan can spell doom. Repossession means losing the collateral that you use to secure a loan. Usually, collateral like a car, real estate property, or any value that has value.
However, you need to know that repossession is a monster, and you should run away at all costs. Aside from reclaiming that property you fail to pay off, repossession is like a monster that leaves a negative mark on your credit history and credit score. In other words, you might find it hard to securing finance in the future until seven years.
The damage lessens as time goes, until the period of seven years when it becomes non-existent in your financial history. In some cases, a debt collection agency would take over your account. Depending on the magnitude of the issue, your lenders might sue you for failing to pay up your debt. So, repossession comes with grave consequences that you should try to avoid. If this has happened to you, check out every thing you need to know about vehicle financing for a better shot at being prepared.
What Is Repossession?
The definition is quite simple, reclaiming a property that its owner fails to pay off but with a value that the lender can recoup. It is often an auto, but lenders can repossess real estate or any tangible property as long as it has value. Repossession is very common with auto loans in Canada. It is because the lender is a lien holder on the car title, thereby giving him right in case of a default in payment.
How Repossession Works
The moment you fail when it comes to making payment to your auto loans, the lender has the ultimate right to repossess your car without a court order. They can reclaim the vehicle without your notice, as long as they don’t use force or threat. However, the lender rarely does the job themselves. They often contact a third-party, like a towing company, to help move the vehicle. When you miss your payment, repossession the property becomes the only best line of action for the lender.
When you lose your car to repossession, it is nearly impossible to reverse the situation. To avoid such, you should contact the lender and negotiate before missing a payment. When you discuss with your lender, there will be options that you can take that serve in your best interest. Since it is a negotiation, strive to offer a reasonable proposal that entails paying off your debt or being on track with your payments.
Since the car is losing value and might even worth less than the loan, your lender is ever ready to consider a better alternative. Auto loan in Vancouver follow similar route, even auto loan in Canada and some parts of the world.
Another way to deal with car repossession is to acquire a debt consolidation loan at a very cheap interest rate. Perhaps, you can take a loan from a family or friend and assure them you’ll pay later. Another route of escape is to get a shorter loan term that allows you to pay faster. However, this will mean paying a higher amount every month.
What To Do When Your Lender Repossesses Your Vehicle
Your lender gets furious when you miss a payment. When that happens, they contact a towing company to have your car moved to their facility. Please take note that this can happen without your notice, and they don’t need a court order. When you find yourself in this situation, what do you do?
If you’re going to miss a payment, it is paramount you notify your lender and looks for a better alternative to car repossession. If there is no headway, agreeing to a voluntary repossession would lower the creditor’s expenses and also yours. Although such a default would be in your financial history, they would all be in your credit reports.
If your personal belongings were in your car when your lender repossessed it, you have the right to get them back. The law, in most cases, requires the lender to tell you what was inside, and how to get them. If you discover some personal stuff was missing, consider talking to your attorney.
You need to know your right as a borrower, which is why you need to learn the repossession requirements in your state. Meet with your state general attorney or perhaps the local consumer protection agency.
If you’re bankrupt, it could be an advantage. Ask your attorney about your rights to the vehicle and how you can use your status to keep it.
Car repossession is an ugly situation you should strive to escape. It leaves a hefty dent on your financial history and will affect your ability to secure finance in the future. Before you miss a payment, ensure you speak to your lender on the way out, and try to pay.
Vehicle Auto Finance helps everyone in need whether you have good credit, no credit or bad credit. If you have had a vehicle repossessed in the past and fear you wont get approved for a vehicle loan, Apply here with us and we’ll do our best to help your situation.