Car Repo'd - Accept lender offer or let car go? Advice needed

[FloridaShock]

Brief background: I'm 24 years old, finally going into my last year at college.  Thus far my credit history is pretty bad and I won't be bringing in any significant amount of income until I graduate and begin working full-time, so serious improvements are yet to come.  

After falling a few months behind on my car payments my car was repossessed by the bank this past week.  The bank has said they will release the car to me if I make payment of the past due amount, including the current month's payment, plus the repossession fees and storage costs and I have until 8/18 to do so (per VA state requirement of 15 days).  Definitely accept responsibility for getting myself into this predicament, but now all I can do is figure out how to handle it the best way possible given my current circumstances.

I currently have a principal balance of ~$5.5k on 48 mo. loan @ 16.9% - payments are about $315/mo.  The cost to get my vehicle back is going to be ~$1.6k about $1k of which is made up of past + current payments due.  I purchased the car used and at this point it's probably only worth about $2-3k trade-in and will likely require an increasing amount maintenance and repairs as it's just starting to get to that point age/mileage wise.

Advice needed:

Should I come up with the money to get my car back or just let the bank keep it?

I'm unsure of whether or not I'm going to keep the car either way, as I could get by without one if I absolutely had to, it would just be a little difficult - but, the financial burden is fairly large.  With that being said, I'm afraid of simply surrendering it to the bank, because I worry that it will get sold for even less than trade-in and then I'll be stuck owing almost as much as I did even before the car was sold.  I also don't fully understand whether or not the impact on my credit will be any less either way, now that the car has already been repossessed.  Finally, I'm worried that if I do give up the car, then I'll get out of school, get a job, and then have absolutely no way of getting another car because it will be years before the reposession is off of my credit report.

Any advice would be greatly appreciated!  Thank you.

[coterotie]

You should also consider that with the repossession, poor credit and a possible judgement on you credit report, you may not be able to obtain a job.  As an example, my sister was turned down for a Home Depot clerical job because she had a bounced check.  My wife's hospital won't hire a nurse with bad credit.  The University system the hospital is a  part of won't hire anyone for anything with a bankruptcy.  So don't think a good job is guaranteed unless you clean things up.

That being said, you best course of action would probably be to figure out a way to sell the car and deal with the upside down balance separately.  Likely you could save enough from maintenance, insurance gas etc. to accomplish that during the next year.

If you let it get sold at auction, then a deficiency then a judgement you're looking at possibly tripling the amount you will owe.

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@FloridaShock wrote:

Brief background: I'm 24 years old, finally going into my last year at college.  Thus far my credit history is pretty bad and I won't be bringing in any significant amount of income until I graduate and begin working full-time, so serious improvements are yet to come.  

After falling a few months behind on my car payments my car was repossessed by the bank this past week.  The bank has said they will release the car to me if I make payment of the past due amount, including the current month's payment, plus the repossession fees and storage costs and I have until 8/18 to do so (per VA state requirement of 15 days).  Definitely accept responsibility for getting myself into this predicament, but now all I can do is figure out how to handle it the best way possible given my current circumstances.

@I currently have a principal balance of ~$5.5k on 48 mo. loan @ 16.9% - payments are about $315/mo.  The cost to get my vehicle back is going to be ~$1.6k about $1k of which is made up of past + current payments due.  I purchased the car used and at this point it's probably only worth about $2-3k trade-in and will likely require an increasing amount maintenance and repairs as it's just starting to get to that point age/mileage wise.

Advice needed:

Should I come up with the money to get my car back or just let the bank keep it?

I'm unsure of whether or not I'm going to keep the car either way, as I could get by without one if I absolutely had to, it would just be a little difficult - but, the financial burden is fairly large.  With that being said, I'm afraid of simply surrendering it to the bank, because I worry that it will get sold for even less than trade-in and then I'll be stuck owing almost as much as I did even before the car was sold.  I also don't fully understand whether or not the impact on my credit will be any less either way, now that the car has already been repossessed.  Finally, I'm worried that if I do give up the car, then I'll get out of school, get a job, and then have absolutely no way of getting another car because it will be years before the reposession is off of my credit report.

Any advice would be greatly appreciated!  Thank you.

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[CreditDrama85]

Sorry you experienced this. Unfortunately the previous poster is right, credit has become increasingly more important when being hired for a job. so unless you are going into a field where you have the option to be self-employed, that is something to strongly consider.

If you decided to let the car go, the account would probably be reported as a charge-off or repossession. how many days late were you when they took the car?

The good news is you dont owe that much (roughly $5,000). if you let the car go and were pursued for the deficiency balance you might be able to settle for half of whatever they are asking. At that point you might be working with increased income. As far as your inability to get another car once out of school, even if you do not pay the remaining balance on this car, there are places out there that will give you a loan (it just may not be what you want) and you will have to pay on time and prove yourself for a while with the 2nd loan.

I think if you have the money to pay the past due amount and reinstate the loan (PLUS you can see yourself being able to make on time payments for at least 3 months) then i would try to get the car back. maybe you get student loan money that will help with that. and it would be less detrimental to your credit.

BUT if you cant see yourself paying on time for at least 3 months after you redeem, i would let the car go and keep the $ in my pocket. because once a car gets re-poed once the finance company is on you from there on out and they will come pick the car up again. If that happens you will be out of all that $ and out of a car and you could have purchased a beater with no payments for the cost of redemption.

[FloridaShock]

Thank you for both for your input!

Currently I'm employed by family, but may consider seeking other employment post graduation - either way, credit and job hiring is something I hadn't thought about, so thank you for pointing that out.

It had been about 3 months since I had made a full payment.  I intended on catching up with the student loan reimbursement and made several small payments - in which case, I owed about 2 months worth of payments when they took it.  I made the mistake of avoiding their phone calls and not maintaining communication, though I'm not sure if it would have made a difference at this point.

I think I may have to let the car go at this point because like you mentioned, I definitely have other expenses that, that money would be better put towards.  There may be some way to come up with the money, but then I would still be stretched financially and the car has about 160k miles on it, so it's really only a matter of time before it starts bringing on $1-2k repair bills.  The car payment plus insurance is costing me about $530/month and that doesn't include gas or maintenance, in which case it's likely closer to $800/month.

[CreditDrama85]

another option might be to use the age and condition of the vehicle as a bargaining tool. Maybe the finance company will allow you to pay all past due payments and a minimal tow fee, and put the repo costs on the back of the loan or maybe you all can come up with some kind of variation to reduce the amount to redeem. 160K is a lot of miles even for very reliable brands.

hopefully you have other good items reporting to balance this out. if not look into getting a secured credit card and just let it age, so at least every month the finance company reports this negative, something good is hitting your report too at the same time.

Go with your gut. If you let them keep it your are postponing having to settle but at least it might give you peace of mind, less stress. good luck!

[Exonumist]

Honestly it sounds like you can't afford the car. Have you shopped around for insurance? I don't know how your whole financial situation really looks, but maybe it's time to step back and realize that it's too much money. A repo is never a good thing, but if you can save $800 a month by not making any more payments that's $9,200 a year plus any repairs you avoid. At which point you can settle with whatever collection agency picks it up AND buy a car with cash if you need it for work. Take some time to clean up your credit and maybe wait to get another car loan until you could qualify for a lower interest rate.

[Exonumist]

There's also the option depending on the private party value of going ahead and getting the car back and then promptly turning around and selling it. If you can get the amount that is left on the loan sell it and walk away clean. If it's a little less you would have to pay the difference so the bank will release the title. It's not as easy selling with a lien, but it can be done. I understand that selling to a dealership is easier, but it's going to cost you a lot. I had a Jetta I was selling a while ago. It was worth about 8k private party and dealers were offering 5k. I laughed at all of them and had it sold within a week for 7,800.

[FloridaShock]

My financial situation and what I can afford is a bit distorted with the combination of income, student loans, and assistance from my parents - but it definitely is at the point where it's no longer easy to afford now that I'm back in school full-time.  I've had the car for about 2.5 years during which it was fine, but as I've begun to work fewer hours in order to finish up my degree it has become increasingly difficult to keep up with - obviously.

I'm trying to avoid digging myself an even deeper hole than I'm already in, but it looks like this may be a situation where I have no choice but to let it get worse, knowing that eventually it will get better.

[sccredit]

I think it would be foolish.  I would look very hard at what the Private Party value is and trying to redeem it and then sell it.  A paid auto loan (even with multiple lates) will always look better than a repo.  You are young, the damage of a repo can take years to recover from.  

[Chrisla2077]

Take it from me.....It is very difficult to recover from a reposession. I lost my job and several months later my car back in 2009. I've been struggling for years to find a loan that didn't require a 5000 down payment. My finance company in-turn sold the car and then sued me for the rest...leaving me with a judgement. If you have the money....get the car back- then sell it yourself, or see if you can work out a payment plan that will be easier for your to manage.

When you get ready to buy another car, finance companies take into account your previous auto loan performance, and you don't want to be like me an have to wait 5 years...just to get a car with a horrible loan...and crazy interest.