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Missed Car Payments and a Repo: What You Need to Know

written by: •edited by: Jason C. Chavis•updated: 8/7/2010

When it comes time to pay the monthly bills and money is tight, it’s tempting to skip the car payment in lieu of paying something else. What happens if you missed a car payment and is a repo near? Jean Scheid, a Ford dealer tells us about missed car payments and repo situations.

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    Think Before You Buy

    Contract Morgue File I’d like to think my sales staff and our sales philosophy is a little different than most dealerships. If we see a family of four that wants that loaded up with accessories SUV, we know they probably won’t be able to meet the monthly payment obligation and try to steer them into a vehicle they can afford to avoid missed car payments and a repo.

    Most dealerships don’t care, however, and set sales quotas that pressure salespeople to sell a car, no matter what. You can bet that dealership and used car lot owners know their demographics and average incomes so before you’re talked into something you can’t afford, think before you buy and sign. Buy what you can truly afford to avoid finding yourself in the situation of missing car payments and a possible repossession from the finance company.

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    Late Payments and Repos

    Tow Truck Morgue File There are some steps you can take to avoid the entire missed car payment and repo dilemma. If you find you can’t make your car payment, some of the following suggestions may help:

    • Contact Your Lender – This is SO important to do as soon as you realize your payment will be late or entirely missed. Avoiding the finance company’s emails and phone calls will only make it worse. In reality, the lender does not want your car back; they would rather work with you. When you call, stay calm and explain your situation. Tell the finance representative why you are unable to make the payment or why it will be late. If you can catch up on the following month, ask them to waive any late payment fees. Remember that the lender’s representatives may be stern at first but if you deal with them upfront and in a reasonable manner, they may be able to offer some solutions.
    • Ask About Refinancing – Often, if you have been pretty good about timely payments, you can ask your lender if you can refinance for a longer term or a lower interest rate to lower your monthly payment obligation. Not all finance companies will do this, but some will so ask.
    • Visit the Dealership – It’s also doesn’t hurt to visit the dealership or used car lot where you purchased the vehicle and be honest with them. Tell them you bought more car than you could afford and see if they can help you buy a car that is lower in price and use your upside down car as a trade.
    • Repos – If you don’t call your lender and miss three consecutive payments, your car will be repossessed. Some finance companies warn that they will repo the car if even one payment is missed. If you’ve purchased your car at a buy here, pay here company, they will enter into the repo process as soon as you’ve missed one payment and actually expect buyers to default, allowing them to sell the vehicle over and over again. No matter if you have no credit or bad credit, when purchasing a car, you should try and avoid buy here, pay here car lots, because they prey on people who they know will likely end up in a missed car payment and repo situation.
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    Repos and Obligations

    It’s also important to note that if your car is repossessed, the finance company will sell it, usually at a dealer-only car auction at the best price they can get. If that price is not what you owe on the car, they will come after you for the difference.

    One reason why it’s so important to stay in contact with your lender if you’ve missed car payments and fear a repo is near, is that skipped or late car payments are placed on your credit report but when you begin to pay again, they will eventually even themselves out. A repo or total default will stay on your credit report for seven years and make it difficult for you to finance a car or any other large purchase such as a home, or even the ability to rent an apartment. It's also a bad idea to let someone else takeover the payments on your car loan.

    If you find yourself in a missed car payment repo dilemma, it’s best to contact your lender right away, be honest about your situation, and ask for help and avoid buy here, pay here car lots no matter how tempted you may be.

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