If you are behind on car loan payments, you are at risk of having your vehicle repossessed. Likely, you have already received several calls and written notices about your account, instructing you to make payment at once or risk losing your car. Even if you can't catch up on payments now, your finance company may be willing to work with you but only if you take action immediately.
Communicate
If you're behind on car payments, the most important step for you to take is to talk with your loan finance company. Failure to communicate indicates to your lender that you are avoiding the problem or have no intention of making payments. In that case you'll soon be paid a visit by the repo man.
Contact your lender and explain to them your situation. If you have lost your job, are ill or have experienced some other life event that is keeping you from making timely payments, you may find a sympathetic person willing to work with you.
Ask your lender if they'd be willing to accept smaller amounts, interest only payments or add your late payments to the end of the loan, effectively agreeing to new loan terms. You stand a better chance of having your request granted if you have a job, but by keeping open the lines of communication you may be able to forestall repossession long enough to come up with another, solution such as asking friends or family members for help.
Be proactive and expect to answer some tough questions, including how you plan to catch up on payments, what income you can expect in the months ahead, and follow up your phone conversation with a letter in writing to the same person. Consider selling your car to a third party or find someone to take over payments. You may still be on the hook for past due payments however.
Repossession
If you don't have the means to make payments and your financial situation is hopeless, then prepare for a visit from the repo man. Keep in mind that if you choose this option, your credit will be impacted adversely, perhaps for several years. You'll also lose whatever money you poured into the vehicle to date and you may be held responsible for the loan deficiency. A loan deficiency is the difference between what the repossessed car sold at auction and your outstanding payments.
Tips
Seek legal counsel to learn your rights. To avoid a visit from the repo man, quickly secure alternate transportation, remove personal effects from the car, then take it to the finance company and turn in your keys. You'll avoid the embarrassment of a repo man coming to your home with his tow truck and taking your car removed in front of everyone in your neighborhood. Your credit will take a major hit, but if you've exhausted your other options, then an orderly repossession is better than an untimely knock at your door.
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