Reasons For Returning A Vehicle
There are a number of reasons why you may need to return a financed vehicle. Returning a car could make sense in any of the following scenarios:
- You can no longer afford the monthly payments and want to avoid repossession.
- You purchase a new or used car only to realize shortly after that it’s a lemon.
- You believe you overpaid for the vehicle and would like to look elsewhere for a car.
- You move to a new city and no longer need the vehicle.
- You simply changed your mind about the purchase.
Trading the vehicle in for a less expensive car is something to consider if you still need a car but can’t afford the one you have. You’d still have a car loan payment. But if the vehicle is less expensive, the new payment may be more affordable for your budget than the previous one.
What Are The Drawbacks Of Voluntarily Surrendering Your Car
Now that youre aware of the main benefits of voluntarily returning your vehicle, its time to discuss some of the major drawbacks, such as:
- PenaltyFees Voluntary repossession doesnt mean your unpaid loan is forgotten. Not only will you be charged penalty fees for any payments youve defaulted on, but you will also be responsible for paying the difference between the remaining loan balance and the amount the lender resells it for, if at all.
- Car Resale Value Since most vehicles depreciate rapidly in value the more theyre driven, its likely the lender wont be able to make a profit or break even upon resale. If you dont cover the difference within a reasonable timeframe, they could turn the situation over to a collection agency, further increasing your debt problems.
- Wage Garnishment If your unpaid debt is bad enough, the lender may even try to sue you over the remaining balance, which can lead to wage garnishment and other legal consequences, such as bankruptcy, in the worst of cases.
What To Do If You Can’t Afford Your Car Loan Payments
During the financing process, it’s important to consider your budget to make sure you can afford the vehicle you’re buying. But financial situations can change and you may now be finding it difficult to stay on track.
If you’re having a hard time making your monthly payments, here are some potential ways out.
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Know Your Credit Score
With any loan – student loan, refinance, car loan – your credit score is the single most important factor in determining everything from your interest rate, the loan amount, the monthly payment, and even the ‘yeah’ or ‘nay’ from the dealer – or your credit union or bank.
Note that not all lenders use, or look at, the same scoring system. “Different lenders have different criteria so the minimum score needed to qualify will vary depending on which company is providing the financing,” according to Experian.
So how do you find out where you stand before you apply? That’s easy. There are resources a-plenty to educate yourself on the details of your credit history and how to improve your credit score. Knowing what your credit history looks like will help you secure the maximum loan amount and the best auto loan rates, so know the likelihood of getting credit approval before you go for a test drive.
How To Avoid Going Upside Down On A Car Loan
Being upside down on a car loan occurs when you owe more than the car is worth. It’s also called being underwater or having negative equity.
If you’re upside down on your car loan and sell it, refinance it or voluntarily surrender it, you may need to pay the lender to make up the difference between the car’s value and the outstanding loan amount. If you’re already struggling with your payments, this payment can make your situation much worse.
There may not be much you can do about being underwater on a car loan if you’re already there. But here are a few ways you can avoid it:
- Make a large down payment. Most cars depreciate over timenew cars tend to depreciate rapidly during the first year. If you don’t make a down payment or put down just a little, your vehicle could depreciate faster than you’re able to pay down the loan. Making a larger down payment can help prevent negative equity.
- Opt for a shorter repayment term. A longer auto loan term can make monthly payments more affordable, but it can have an unintended consequence if you’re not careful. Even if you put money down on your loan, a longer repayment term means you’re paying down the loan more slowly, which could make it easier for depreciation to outpace your repayment.
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Vehicle Forfeiture In Florida: Can The Police Take Your Car
Pursuant to the Florida Contraband Forfeiture Act, the police can take your car if they can prove that you or someone else used your vehicle in the commission of a crime. However, due to recent changes in legislation, the burden of proof the police have is much higher. They must abide by strict protocols to rightfully take your car.
If the police took your car, you have the right to a hearing to state your case and ask for your car back. Goldman Wetzel can help. Contact our office in St. Petersburg and talk to our criminal defense lawyers. We can review the facts of your case, explain your rights, and help fight the forfeiture to get your car back.
Another Option If You’re Leasing
Check out peer-to peer lease exchange sites such as Swapalease and LeaseTrader. The premise is simple: A person who needs to get out of a lease posts the vehicle on the site. If a shopper sees your listed vehicle and likes the terms, that shopper can take over the lease provided that the bank allows it and the shopper qualifies. If you can unload your car this way, you’re off the hook for future payments.
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When Can My Car Be Repossessed
If you default on your written agreement, a creditor can repossess a vehicle or personal property without advance notice to you and without filing a lawsuit. This is because your installment loan is secured by the property. The back of the car title shows who has a security interest or lien against the car. The most common reasons for repossession are being late on monthly payments or for failing to maintain car insurance.
What Happens When You Return A Lease
For starters, when you return a car at the end of a lease youll also have to pay whats called a disposition fee, which is a flat fee you agreed to pay at the end of the lease when you originally signed your contract. Your lessor may even waive fees for wear and tear if you agree to sign on to a new lease with them.
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Review The Dealers Loan Offer
Once youve taken a test drive and have found a car that meets your needs, you may still have a shot at an even better interest rate from the dealer.
Carmakers set up their own banks exclusively for auto purchases through dealerships, and they sometimes offer below-market interest rates. Once the finance manager finds out youre preapproved for a set rate, hell likely try to beat that rate to get your business. Theres no harm in applying to see how low your interest rate can go.
And if you dont want to play that game, still be sure to tell the salesperson youre already preapproved. Tell the salesperson you are a cash buyer, so you can haggle on just the price of the car, not the monthly payment.
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Am I Responsible For The Loan On My Car If I Voluntarily Turn It In
Yes, you will still be responsible for the loan or debt on your vehicle even if you voluntarily turn it in. If you have a vehicle that you cannot make payments on, you have the choice of voluntarily surrendering the car or you can let the creditor repossess it. What many people do not know is voluntarily surrendering the vehicle is still considered a reposession on your credit report, a voluntary reposession.
When you voluntarily surrender a vehicle, you take the vehicle back to the lender on your own terms. You can usually contact the lender and they will work with you on a time to turn the vehicle back in.
If the vehicle is non-voluntarily or involuntarily repossessed, they will come and get the vehicle on their terms. The lender may not care when this is and it could even occur at night or at a time when you are not around. There are also fees associated with a repossession that you can avoid if you voluntarily surrender the vehicle.
So in the long run, you will be responsible for part of the loan if you voluntarily surrender your vehicle. Depending on how much you owe on the vehicle and how much the lender resells the vehicle for will determine the deficiency balance. You will be responsible for the deficiency balance and the voluntary reposession will still show up on your credit report.
If you file for bankruptcy then you may be able to avoid the repossession appearing on your credit report and you can wipe out the deficiency balance on the vehicle.
Do Dealerships Lose Money When You Refinance
There are many common misconceptions about auto refinance that may deter you from refinancing your loan. … Fact: The truth is, dealers are incentivized to keep you in your original loan. Dealers lose their commission on the financing of a vehicle if the loan is paid off within 90 days of the closing date.
Here’s when you should refinance your car loan.
- Your credit score has improved. …
- You want to change the loan term. …
- Loan rates are down. …
- You hate your current lender. …
- You have an older car. …
- You’re underwater on your loan. …
- You bought the car less than 6 months ago.
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What If The Lender Doesnt Repossess Your Car
- Unfortunately, the lender also has no obligation to release the lien from the title
This means that:
- You are stuck with it if the lender doesnt come to pick up the car
- You cant sell it because the lender still has the lien, and selling it would be committing a theft
- You must keep it you cant junk it or give it away either
So, what should you do?
Voluntary Repossession: Lower Cost Less Chaos
Falling behind on car payments can happen to anybody. Perhaps you lose your job or substantial expenses catch you by surprise. As soon as you realize you cannot afford your payments, it’s time to do something. If you don’t, the lender may repossess the vehicle.
When you get an auto loan, the vehicle that you purchase secures the loan and your lender can repossess the vehicle and sell it if you stop making payments. The sales proceeds go toward paying down your loan.
Taking the initiative and returning your car to your lenderalso known as a voluntary repossessionmight be a good option, but it’s important to understand how the process works before you drop off the keys.
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What If I Just Want To Hand The Car Back
It depends on the type of finance you have and where you are in the contract.
If you bought your car using personal contract purchase or hire purchase then youre allowed to hand it back to the finance company if you have already paid off 50% of the loan, including any interest and fees. This is known as voluntary termination.
If youve yet to pay off 50% of the loan then youll have to make up the difference if you want to hand the car back. Equally, if youve paid off more than 50%, you wont get that extra money back if you cancel the contract and return the car.
If you lease your car through a personal contract hire scheme then its a lot more difficult to hand it back to the finance company. You can return it, but youll probably have to pay back any remaining money you owe on the contract, so if you still have a year left, then the lender will expect a years worth of fees up front. In this instance, its better to contact the finance company and see what else you can arrange.
If you used a bank loan or credit card to buy your car and cant afford the repayments, then youll likely have to sell the car to cover the money you owe.
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What Happens If Your Car Is Repossessed
Once the borrowers vehicle has been repossessed, the car title loan lender can choose to sell the car at an auction. Any of the money that they acquire from the auction will go towards the remaining balance of the loan. If the auction gives more money than the loan is worth, the lender has to give the remaining money from the loan difference back to the borrower that defaulted on the loan. If there is any property within the vehicle, the lender must return it to the borrower.
If you are currently working with a lender to try and fix your defaulted loan, but they are not supportive or encouraging, LoanMart can help you refinance your loan with your other lender1!
LoanMart works with our customers so repossession is the last resort. It is the last thing we want to do. We believe it is more beneficial for both customer and company for the life of the loan to be completed without any problems. Thats why LoanMart provides customers with the resources to understand what happens when you default in order to prevent it or give customers options to solve it. We encourage calls from our customers who are struggling with payments, or from customers of other lenders who want a better service.
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Figure Out Your Cars Current Market Value
Cars lose value very quickly. Unlike houses, which can get more valuable over time, vehicles are an asset that wears out over time and as they get older they are more costly to maintain. In fact, new cars depreciate by several thousand dollars as soon as theyre driven off the dealerships lot. Its important to figure out how much your car is currently worth because it can affect how you should go about getting out of your loan. Do a quick Google search and find a car value calculator that takes your vehicles make, model, year, and number of kilometers into account. Check out online classifieds and see what used cars with similar features are selling for. Once you have a dollar figure, you can find out if it makes sense to sell your car to pay off your loan.
How To Return A Leased Vehicle
If you’ve leased the car, you’re in a somewhat different situation. Obviously, you can’t sell it.You can return the vehicle to the dealer, but if it’s before the lease expires, you’ll likely face some stiff early termination fees. Plus, you will still owe the balance remaining on the lease andâto add insult to injuryâalso lose the upfront money originally paid.
However, drivers who want out of their contract ahead of schedule can take heart: There are a few options that allow you to circumvent the usually harsh termination penalties. One frequently overlooked pathâand often the least expensive choiceâis to transfer the lease to someone else.
It works like this. Suppose you have two years left on a three-year lease. Whoever buys your lease agrees to make the remaining monthly payments. While some finance companies donât allow such transfers, the vast majority do. The trick is finding someone interested in taking the reins from you.
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How Can I Get A Title Loan Online
With digital loan service platforms and instant quotes, its easier than ever for borrowers to complete the auto title loan process completely online.
To see what a particular vehicle is worth, owners can enter the cars details into a quick online form on IneedCashNow.net for an auto title loan quote.
If youre looking for a way to get quick cash without leaving your house, applying for a car title loan online is a simple solution. Short-term financing can be a smart solution for those impacted by a recent layoff, pay cut, or other economic hardship.
Contact a title loan specialist today to learn more about your options through INeedCashNow.