Repossession question... should I???

[Anonymous]

Hello all,

I am considering a voluntarily allowing my vehicle to be repossessed and, honestly, for selfish reasons. I'm very upside down in this car and got into a really crumby loan that didn't help matters one bit. Because of that, I'm trying to figure out what will cost me less money over the course of the next 4-5 years. Letting my vehicle be repossessed, or paying it off and paying for repairs along the way.

What has promped me considering the repo is the fact that a $1,700 repair has come up that is very necessary and the fact that I'm currently 7k upside down assuming I received a decent offer on my vehicle... which I don't think would happen. I owe about 14k and believe that my vehicle is worth 7k to a private party buyer. So, at this point, I consider myself to be 9k in the hole with a whopping 42 months left in payments. I drive an '04 Civic Hybrid and don't think the car will be worth much more than 4k to a private buyer at the payoff date. So, at that point, I'm looking at "losing" 11k over the course of the next 42 months by keeping this vehicle and am wondering if any of you think it will cost me MORE than 11k over the next 4 years to just let the vehicle go.

I wont need any major financing in that time as I have a house and wouldn't need another vehicle so I am looking at this from a financial standpoint and seeing if it makes sense. I realize that vehicles lose value over time... I really do... but I really dislike this vehicle and only bought it to roll in the negative equity from my 02 Lincoln LS trade in (and triple the amount of MPG I got as well as lower my insurance premium) which is esentially the entire reason I'm upside down as much as I am. If I liked the vehicle, I wouldn't care. I have a monthly payment amount budget for auto expenses and would be comfortable making that payment. But to know that the vehicle is literally worth HALF of what I owe on it, needs expensive repairs, and will continue to fall apart due to it's age (not to mention the possibility of it needing a new hybrid battery very, very soon which costs thousands) really wears on me.

Any advice? I don't need to be flamed here... I'm just looking for the input of people who are seeing my point of view for what it is.

Also, I don't quite understand the full consequences for allowing this to happen. I know that my car gets auctioned and that I owe the difference. But I also know that lenders don't really "hold" this against you if four years have elapsed since the date of it being repossessed.

Thank you all for your help and input... happy holidays!

Rick

[Anonymous]

not that i'm an expert but here's why i wouldn't:

they could sue you for the difference then you're paying what you still owe for absolutely nothing.  that makes no sense to me at all.  i would hate to have my wages garnished for nothing

even if you say you don't need credit now, that situation could change at any second

i'm not sure what you mean by lenders wouldn't hold a repossesion against you after 4 years.  why wouldn't they?  i'm almost certain they would.

keep in mind that cars are never, ever assets.  any car you buy you are losing money.  why make this one an even worse liability than it already is?

anyway, that's why i wouldn't.  what i would do is just throw as much money as possible at it and get the loan paid off and move on.  i got a horrible auto loan in 2005 because i was foolish in my past and i just paid paid paid until it was finished.  i managed to pay it off 2.5 years early.

i wish you luck though

[Anonymous]

+1 to capitalistpig

1. They WILL come after you for the difference. That is a large difference and they most likely will sue for it. If it was only $1000-$2000 you might just get a CA after you but with that amount they will sue you and you will STILL HAVE to pay it and then wont even have the vehicle to show for it.

2. It will affect you for 7.5 years not 4 years. That repo will remain for 7.5 years from the date of first delinquency. And if they get a lawsuit and a judgement against you the judgement will also go on your credit report and will possibly get your wages garnished.

3. The reason you are upside down is because you rolled so much negative equity from the Lincoln LS so you did get yourself into this situation. If it was that much negative equity and that bad of a loan you shouldnt have done it. Not flaming you but this one is on you and you should step up and take responsibility for it.

You can let it go if you like but I almost guarantee with that large amount they will sue you and you will pay it in the end. I have a friend who just got a judgement for a repo. He had to get all vehicles he owned transferred to someone elses name and any money he had in savings accounts or anything he transferred to his sons name befor ehe went to court. The judge ordered he can only have one car and has to make a monthly payment on the judgement. If they catch him with another car in his name the company that got the judgement can legally take the car sell it at auction and apply that amount to what he owes. This will haunt you if you go through with the repo.

I advise you continue to pay it and just live and learn with this one.

[Anonymous]

Great advice... and it's all kind of common sense. I came on here to basically get myself talked out of making this decision. My middle FICO is about 672 at the moment and has improved 100 points in 18 months due to me paying off every single obligation outside of my auto loan. I'm very proud of the fact that I have cleaned up my credit and didn't want to have to ruin it again to save a few bucks. Granted, it was only bad to begin with because of fraudulent charges and charge offs but needless to say... I still got it to a point where it should be in the 700's, no problem, by next year.

I have a pretty good understanding of credit, underwriting guidelines, and over all impact of these kind of things as I am in mortgage lending myself. That is also why I stated that I know what kind of impact it has after it has sat on the report for four years. While I know that it wont drop off for another three and a half years, I just wanted to know what kind of impact it would have on ME overall and you two basically answered that. I see a lot of quirky things on the credit reports that I pull and see a lot of people with 640-710 FICO scores while carrying a serious derrogatory item like a repo or charge off.

You're right, however... I need to suck it up and be a man about this. As much as I would like to just move on, I can't. I just wasn't sure if I would be sued and how much this would be pursued so I figured that I should come on here and see what other people though.

Thanks again!

[Anonymous]

I am glad you know whats right. You are on the right track. I know it sounds like a long time but you could always try to pay more than your minimum payment and get it paid off earlier. I think you would be surprised how much money you would save if you pay an extra $100-$200 a month on the loan. That is if you have it available. All that extra will go toward principle and reduce your interest. I am sure you know how this works since you work with mortgages but if not check into it if you have some extra funds you could apply to it or if there is an area you could reduce spending and put some toward it. It may help you in the long run and will make you feel better as you get it paid down faster and get out of the loan. Then sell the car for what you can and move on. Good Luck to you and hope you can stay on the right track.

[Anonymous]

you should be very proud of yourself for raising your score 100 points!!

i got my car paid off much faster than i thought possible and i feel sooooo much better for having done that.  okstate's right, just a little extra a month makes a difference 

[Jazzzy]

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@Anonymous wrote:

Great advice... and it's all kind of common sense. I came on here to basically get myself talked out of making this decision. My middle FICO is about 672 at the moment and has improved 100 points in 18 months due to me paying off every single obligation outside of my auto loan. I'm very proud of the fact that I have cleaned up my credit and didn't want to have to ruin it again to save a few bucks. Granted, it was only bad to begin with because of fraudulent charges and charge offs but needless to say... I still got it to a point where it should be in the 700's, no problem, by next year.

I have a pretty good understanding of credit, underwriting guidelines, and over all impact of these kind of things as I am in mortgage lending myself. That is also why I stated that I know what kind of impact it has after it has sat on the report for four years. While I know that it wont drop off for another three and a half years, I just wanted to know what kind of impact it would have on ME overall and you two basically answered that. I see a lot of quirky things on the credit reports that I pull and see a lot of people with 640-710 FICO scores while carrying a serious derrogatory item like a repo or charge off.

You're right, however... I need to suck it up and be a man about this. As much as I would like to just move on, I can't. I just wasn't sure if I would be sued and how much this would be pursued so I figured that I should come on here and see what other people though.

Thanks again!

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Your thinking was backwards. You said that you didn't want to go through the repo and ruin your credit just "to save a few bucks."

Hopefully by now you've realized that letting this car be repoed will cost you quite a bit more than paying it off will. With bad credit, you will be charged more for car insurance, you will pay higher interest on anything that you try to borrow, etc. Because of bad credit, you could also be denied the next job you want. This repo could end up costing you a small fortune....for quite a few years.

Look at paying this car off as if you are paying off a "school loan." You have gained quite an education by rolling negative equity from one vehicle into another vehicle. Hopefully you'll never do that again. You've also educated yourself while repairing your credit. This was expensive "schooling," but, in the end, you will have graduated with a degree in common sense and integrity.

Don't feel bad about working hard to get this paid off. Feel good about it.

[laz98]

question:  you said it's an '04 civic hybrid, right?  did you buy it used?  hondas tend to hold up very well if you treat them decently.  we have an '04 civic that is now paid off, & it's in great condition.  i'm curious why yours would need such expensive repairs.

[Anonymous]

I would not let them reposses it.  If it was me I would see If I could get a signature loan for the difference in what you owe and the payoff.  You can

stretch it out for a while but it would allow you to get out of the car with no damage to your credit.  They normally sell those cars at auctions for what they

can get and then come after you for the rest.  If you owe 14K and they only get 2k for the car at the auction they will probably get a judgment on you and

garnish your wages as well you will have to pay all court cost and associtated attorney fee's as stated in your contract.  I hope all works out well with what ever decision you decide.

[MattH]

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@Anonymous wrote:
I am glad you know whats right. You are on the right track. I know it sounds like a long time but you could always try to pay more than your minimum payment and get it paid off earlier. I think you would be surprised how much money you would save if you pay an extra $100-$200 a month on the loan. That is if you have it available. All that extra will go toward principle and reduce your interest. I am sure you know how this works since you work with mortgages but if not check into it if you have some extra funds you could apply to it or if there is an area you could reduce spending and put some toward it. It may help you in the long run and will make you feel better as you get it paid down faster and get out of the loan. Then sell the car for what you can and move on. Good Luck to you and hope you can stay on the right track.

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Yes, I agree strongly, Original Poster's best option is probably to look hard for other places to cut spending and/or increase income and put the extra cash towards making additional principal payments on that loan.  OP should check whether there is a prepayment penalty, however, as that may affect the decision.  I've never had an installment loan of any type with a prepayment penalty, and I gather for "prime" loans prepayment penalties are quite uncommon but the farther a loan is from prime the more likely it is to have a prepayment penalty.