Auto Repossession: Peeling Back the Veil of Secured Debt

Car and truck repossession, like sausage manufacturing and politics, certainly has its benefits, but the actual process can be grossly unfair and disturbing to watch. This article is going to lift the veil and let the average consumer take a look at what happens in recovery. This article should help you decide what a foreclosure could do to you if you’re struggling with car payments and wondering what action to take.

deal gone wrong

It’s well known that when you buy a new car, it depreciates substantially as soon as you pull it off the lot. In layman’s terms, that means the car is worth a lot less money right after you buy it than it was before you owned it. Depending on the size of your down payment, then, you could very well be, and most likely will be, “underwater” on the loan: the car is worth less than it owes. For this reason, I prefer to buy used cars myself, but if you don’t, and you shop right, things will eventually work themselves out. As long as you can continue to make the payments, the car will lose value more slowly than the note. But what if something comes up and you can’t make the payments? That’s when a nasty surprise awaits you.

After missing a payment, you will find that the car dealer has taken a great interest in you. They will call and write. And they will keep calling and writing until their payments are up to date. If you can’t pay, the dealer will eventually suggest you return your car, or you might get the idea. If you don’t return the car, the dealer may send “recovery men” to retrieve the car. You may go to your usual parking spot only to find that the car is missing. They won’t leave a note either.

But not long after, you’ll probably get notice that your car will be sold “at public auction” within a certain period of time. They may talk to you about a “right to redeem,” which in at least some states is your right to make payments and repossess the car. Let’s assume for the present example that you can’t do that. Let’s say (to keep the numbers simple) the purchase price of the car was $15,000 and you made a down payment plus other payments of $5,000. The car is now two years old and its “blue book value” has been reduced to $8,000. So you think that after the company sells the car, you’ll owe about $2,000, right?

Recovery in the real world

Wrong! A month later, he will find out that the car sold for $2,500. He was charged $250 for the “repossession fee” and another $250 for “reconditioning.” So they “credited” your account with $2,000 against the $10,000 you owed, and now they want another $8,000 from you. They send you a letter describing everything they have done. You had a $200 camera in the glove compartment and you ask about it. They tell you that it is “lost”.

That’s recovery in the real world.

Leave a Reply

Leave a Reply

Your email address will not be published. Required fields are marked *