Auto loan situation.

Hello, i hope someone here can give me some input. Here is my situation, i currently have a car with a 800 a month car paayment, it is jsut way too much to handle now adays, i make the payment but have a few 30+ day + plus lates on my credit. I jsut cant afford the payments anymore. If i let this car go will i ba able to get a loan with the lending market the way it is now a days?? I do not have a god credit score, but as of now i dont have a repo or BK or anyhting. I have a great job that i make about 55-60k a year at so I know that is a plus. My biggest issue is that i currently have a loan for about 30k and as of today my car is only worth about 15k, i can buy my same exact car with half the miles, half the price, and probably haf the mohtly payment but what is the best way for me to go about this?? Any help is much appreciated. Thansk

Matt

Unfortunately, if you let the car go back it WILL impact your ability to get a new car loan - at least initially. Letting the car go back will be reported as a voluntary repo. A voluntary repo is just as bad as a normal auto repossession and it will kill your scores. Auto lenders use what is called an "auto industry option" fico score model when they pull your credit reports and scores. This auto industry score is a customized score that places more weight on your previous auto loan payments/history. With a repo, it shows that you were unable to pay the loan as you initially agreed and places more weight on this account than a normal FICO score would.

The other problem with giving the car back is that you're still liable for the debt and will most likely end up paying for the car anyway. With a repo, the lender will sell the car at auction (for much much less than what you owe) and then come back to you for the remaining balance. And if you're unable to pay or negotiate a settlement on the remaining balance, the lender can sue you and file a judgment against you or garnish your wages (if it's legal in your state).

I know these aren't the answers you were hoping for but I wanted to make sure you were aware of the process before you let the car go back.

You can read more about voluntary repos here:
Voluntary repossessions still no good for credit scores

Thank you for the response. And ya that kind of stinks, but what if i was able to get a car now before i let the other one go. is there some way that they could come take the new one because i let the other go?? Currently my only debt on my credit is my car payment and a few collections for some little things, but i make about 60kyr so my debt to income ratio is pretty low???

It's not something I would recommend. When you apply for a new car loan, the lender will see that you already have an existing loan and it's bound to raise flags to the lender. As you know, with the economy, lending restrictions have tightened considerably. The kicker is that you're going to end up paying for the car whether you let it go back -- the repo doesn't let you off the hook for the debt. As I mentioned previously, they'll sell the car at auction for much MUCH less than it's worth and come after you for the difference.

I don't know what kind of interest rate you're paying right now but if it's high, you might consider seeing if you can refinance with a local credit union or bank at a lower rate. It could save you money and lower the payments to something you can afford. And if you're really having a difficult time and can no longer afford the payments - before you let it go back, it would be worth a shot to contact the lender to see if they would be willing to work something out.

I too have to turn in my vehicle. My question is, if I send in half payments every month for a while can they still repo my car. I also have talked to the loan company that I may have to turn my car back in because my unemployment will be running out soon. they have requested I send them a copy of my bank statement and the last 2 years of my W2's. I am unemployed at this time (7mths) Is this legal for them to request I send them this info and if so what would be the purpose.
Thanks

haddockd wrote:they have requested I send them a copy of my bank statement and the last 2 years of my W2's. I am unemployed at this time (7mths) Is this legal for them to request I send them this info and if so what would be the purpose.

I'd be a little apprehensive about providing bank information and my w2s... It doesn't make any sense if you're going to be giving the car back as a voluntary repo. Maybe I'm missing something. Did you ask them why they needed this? For what purpose?

She didn't seem to know. she said just what they required. I haven't sent them anything yet. I just missed my payment Never have been late. What if I send in partial payments. I guess they can still pick up the car. Gosh, first the job, then the house, now the baby carriage. What next....Unfortunately they will not negotiate to lower payments. They are a 3rd party billing. System & Services Tech. out of Mo. I have worked so hard to keep credit in good standing, soooo depressing...

I'm sorry to hear what you're going through ... I know it doesn't help but you're not alone and it is extremely depressing knowing that so many under the same pressures that you're going through. I have friends and family that are in the same boat and it's disheartening to know there's really not anything they could do except to have a enough of a cushion in their emergency savings funds to get them through until a new job comes along. Even then, the typical three month emergency savings plan isn't covering it right now... It's more like 6 months to a year for an emergency fund.

Unfortunately, you're right. Even if you make partial payments, they can still repo the car. Before agreeing to send them the documents, I would definitely push talking to someone that actually knows WHY they would need them. If the purpose is to renegotiate your payments or loan terms, that's one thing... but if they can't do that, what would be the purpose of sending them that documentation unless it was to use it against you with collection proceedings?

Trade someone who can afford it.