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Ok so I have a 2006 Honda Element which I bought brand new. Now I still owe ,000 on it, which makes it 2 more years of 0 payments. The problem is that I was laid off from my work and had trouble paying for it as well as for the insurance. So I went about 5 months without insurance, and so the place which I finance it with added this ridiculous insurance that was 0 extra a month. So now that I cached up with just my car payments I still have this owe them about 00 just for that insurance, plus of course my regular 0/monthly payments. There is just no way I can afford to pay that for that insurance, I already added my insurance. But that is killing me and it is making me go to the extreme to just let go of my car.

5 Comments »

1. 

   Call them, explain your situation, and ask if they can possibly add the $1000 to the back end of your loan–i.e. you make two extra $500 payments at the end of the loan to cover the $1000 forced insurance. You will pay a bit more in interest, but you’ll be able to stay current on your loan, keep your car, and keep a repossession off your credit report.

   If it does end up getting repossessed, it will ruin your credit. It will be virtually impossible to get another car for at least two years and difficult to get any other kind of credit, as well. It’s bad bad bad. Do whatever you can do to stay in the loan, even if you have to sell the car and take a small loss. It’s not worth the loss of your credit.

   EDIT – and like the guy above me said, you’ll still owe the bank any money they were unable to collect after they auction the car. Better to sell it and still owe that money than have a repo on your credit…

   Comment by Leah — July 1, 2011 @ 9:03 pm

2. 

   First, there is the consequence of you not having the car any more.

   If the bank repossesses the car, they will then sell it. If it sells for less than what you owe, you will still owe the bank the difference. For example, if you owe the bank $13,000 dollars, and they repossess the car and sell it at auction for $6,000, you will still owe the bank $7,000. That debt will remain outstanding on your credit report. The bank would likely sell the debt to a collection agency. That collection agency could attempt to garnish your wages, put a lien against property you own, or take other adverse action. You will also likely be unable to obtain any type of credit until some period of time after you eventually pay off the debt.

   If you simply can’t make the payments, you may not have a choice but to have the car repossessed. It should be a last-resort option, however.

   Further, the bank does not want to repossess your car. They would much rather work with you and find a way for you to be able to make payments. I would contact the bank and advise them of your financial situation, and see if they can negotiate an alternate payment arrangement.

   Best of luck to you!

   Comment by Jared Bachman — July 1, 2011 @ 9:03 pm

3. 

   If you let the company repossess your car and you owe $13,000.00 and they sell your car for (this is just an example) $3,000.00 you will still have to pay the car company $10,000.00 for a car you don’t even have. Get a 2nd job,friend, and unfortunate a lot of people don’t know that the car dealer always find the highest insure company to fatten there pockets. If you file bankrupt they usually let you keep at least $10,000.00 worth of merchandise.

   Comment by C X — July 1, 2011 @ 9:03 pm

4. 

   They force-placed high risk insurance because you let yours lapse. They are entitled to do that.

   A voluntary repo is still a repo. It will ruin your credit, the lender will sell the car for whatever it can get and then come after you for the unpaid difference on your loan balance, plus fees and interest.

   Try selling the car.

   Comment by William — July 1, 2011 @ 9:03 pm

5. 

   they will sell teh car at auction) – it will probably sell for a lot less than your loan balance – they will then send you a bill for teh remaining loan balance PLUS a few $1000 more for repo fees – and then you have to pay it – the bill they send you will probably be $6000-9000 depending on how much they get for the car and you will no longer have a car

   it happened to me – helped force me into bankruptcy

   why on earth did you ever get a car with $500 a month car payments?? that’s a rent payment

   Comment by Doctor Deth — July 1, 2011 @ 9:03 pm

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