How to Negotiate Your Car Repo

Borrowers usually have two opportunities to negotiate a car repossession: before the lender repossess the vehicle or after the vehicle has been seized and resold. If you know you'll have trouble making your car payment, contact your bank to negotiate your loan terms or ask for a payment deferment. If your vehicle has already been repossessed and your lender agrees to negotiate the balance due on your loan, the agreement is considered a settlement. Loan settlement cause tax issues with Internal Revenue Service, so be prepared to pay taxes on the amount of the loan balance you didn't pay.

Instructions

Before the Lender Seizes the Vehicle

1

Call your lender and ask whether it can defer one or more loan payments. A payment deferment allows you to skip car payments without penalties, such as late charges or a negative mark on your credit report.

2

Sign an agreement with your lender if it agrees to defer payments and keep the document for your records. If you find you still can't make your payments before the next payment's due date, contact the bank again and ask whether it offers loan modification. A loan modification extends the term of your loan and lowers your monthly payment.

3

Submit a credit application if your lender requests one. Some lenders may require proof of financial hardship before approving a loan modification application, so submit proof of hardship if requested by your lender. Your lender will tell which documents are acceptable.

4

Sign your new loan contract and abide by its terms to avoid future issues with repossession. Keep a copy of the new contract for your records.

After Repossession

5

Wait for a statement from your lender, which states the vehicle's selling price and the balance due on your loan. This letter usually comes about two weeks after your car is resold.

6

Determine how much you can afford to pay, either monthly or as a lump sum. Call your lender and make an offer. Your lender is more likely to take less than you owe if you pay the settlement balance in full.

7

Ask your lender to remove the repossession from your credit report as a term of paying the balance in full or for satisfying the total balance. Even if you don't negotiate the total balance, arranging to have the repossession removed from your credit report will significantly improve your credit rating. Get any agreements in writing in case your credit report shows the repossession after you've paid as promised.