Having a car repossessed hinders more than just a vehicle owner's ability to get from Point A to Point B -- it has a severe impact on credit scores, limiting the ability to get loans or credit cards for up to seven years. The Better Business Bureau's tips can help you avoid losing a vehicle and your creditworthiness. The worst thing you could do when falling behind on a car payment is to bury your head in the sand and ignore the problem. To prevent repossession, and the negative effect on personal credit scores, automobile owners have to take responsible action and face the issue head on -- otherwise, there is nothing good that will come of the situation. As if car owners didn’t need another reason to avoid the repo man, if a lender chooses to sell the car at auction, and it is bought for less than the outstanding loan, the original owner may still be on the hook to pay it back in addition to added fees — essentially paying for a car they no longer own.
The BBB recommends car owners consider taking the following steps when falling behind on car payments:
Contact your lender. Be proactive.
The best case scenario for both you and your lender is to keep you in your car and making payments. To that end, lenders will often work with troubled borrowers to develop more agreeable payment plans. Some possible options are loan refinancing, extending or deferring payments, changing payment due dates and waiving fees.
Cut costs elsewhere. If you can’t afford to lose your car, consider the items you pay for that you can afford to do without: cable television, restaurant dining, and new clothes are just a few examples.
Choose a less expensive vehicle. If you’re not upside down on your loan, and can pay off the loan on the vehicle by selling it, consider finding a less expensive auto with monthly payments that are within your means.