- Nobody wins when a car is repossessed.
- Lenders want to help troubled borrowers.
- A number of options are available to make borrowers current.
If you’re looking for information about avoiding repossession due to the Coronavirus pandemic, check out our advice on what you can do if you can’t make your car payment. A couple of missed car payments on an auto loan are reason for serious concern, but they don’t have to lead to losing your car.
Although some areas of the economy appear to be recovering — or are at least no longer in free fall — many people are still living week to week and paycheck to paycheck. Where this is the case, any bump on a borrower’s financial road can mean falling behind in monthly auto-loan payments. Illness, a job layoff or even a major appliance unexpectedly going on the fritz can lead to missed car payments.
The good news is that past-due payments and repossessions are down from their peak numbers in 2009, according to credit data expert Experian. For example, the number of repossessions dropped by nearly 40 percent from the end of 2009 to the fall of 2012. So things are getting better.
Repossession Is Lose-Lose
Here’s the truth many borrowers don’t realize: When a car is repossessed, nobody wins. From the borrower to the lender to the carmaker to the car dealer, everyone loses. No one wants a borrower to lose his car. The borrower winds up without a car and with a huge hit to his credit score; while the lender ends up with a used vehicle it must sell at a big loss. Experian reported that in the fall of 2012, on average, lenders lost more than $7,000 on every repossessed vehicle. Repossession hurts everyone.
Here’s what Chris Brenner, the national manager of debt management at Toyota Financial Services (TFS), Toyota’s own auto-loan division, had to say about repossession: “For TFS, repossession is the last step and least desirable outcome. Our goal is to develop strong, lasting relationships with our customers on behalf of not only TFS, but also Toyota and dealers. Also, repossession almost always results in financial loss for TFS.” Find a used car for sale near you
Contact Your Lender
But what if you suddenly find yourself in trouble? You need to face the fact that you probably won’t be able to catch up with even one missed payment. That means you must do something.
What should you do if you find yourself behind a payment or two or in a situation that you believe will cause you to fall behind in your payments? Don’t panic; take action.
According to lending experts, the worst action is no action at all. The sooner a troubled borrower contacts his lender, the better the chances that a happy ending for everyone can be reached.
“Early communication with the customer is important,” declared Brenner, “TFS prefers to work with our customers as soon as they become aware of financial challenges that may impact their ability to make a payment.”
Why contact the lender as early as possible when things begin to go sideways? Early communication means more available options to resolve the problem. In the initial discussion, it’s important to be honest with yourself and the lender. Is this a short-term problem like using this month’s car payment to replace your refrigerator which stopped working, or the disruption caused by a natural disaster like Hurricane Sandy? Or is it more long term, such as losing your job?
There Are Remedies
For the most part, lenders have no hard and fast rules; they work with troubled borrowers on a case-by-case basis. Each has its own set of options. However, there are a few possible actions most lenders share. Refinancing the loan, changing the due date, differing payments, modifying the terms of the loan, making payment extensions and waiving late charges are among the options a particular creditor might consider.
Members of the armed services have even more available remedies of their own. “The Servicemembers Civil Relief Act (SCRA) also offers a number of benefits to help covered members of the military meet their financial obligations while serving our country,” Brenner advised, going on to say, “For example, the SCRA allows covered servicemembers to have their interest rate lowered to 6% when applicable.”
The most common solution lenders offer is extending the loan. In simple terms, an extension waives a specific number of upcoming payments and then adds them to the back end of the loan. Although the borrower may not be required to make interest payments during the waived period, the interest will continue to add up and will be worked into the extended payments.
Even if a borrower’s problem is long term, there may be a solution. Remember, lenders only want your car back as the very last resort. If the lender is one of the manufacturer-backed companies like TFS, one option may be to trade down to a less expensive car.
“There are situations,” Brenner said, “where the customer is no longer able to maintain the payments for a vehicle for an extended time period. This can be an opportunity for the customer to return to the Toyota dealer and work with them to determine if there may be other options which would still allow the customer to have a vehicle but not necessarily the vehicle they initially leased or purchased.”
What It Means To You
Sticking your head in the sand won’t solve the problem when you’re faced with missed payments. Most lenders want to resolve the problem and will work with you to do just that, but you have to give them the chance.
Related Car Finance Articles:
- Car Finance 101: Everything You Need to Know
- What Is Buy Here Pay Here?
- 5 Tips for Financing a Car With Weak Credit
Editor’s Note: This article has been updated for accuracy since it was originally published.
I have A 2007 Didge Ram I financed with Genisys Credit union, three years ago, lost job, took on one with pay cut, Now I cannot make the $462.00 monthly payments, They will not extend loan nor reduce payments, missed two payments and Am I missing something, This was in Michigan, Live in Tennessee now, each day I come home from work expecting my truck to be gone, hasn’t yet, How long till they come down to get it, Anyone with suggestions will be greatly appreciated
I was 9 days late on my car payment, and has been pretty much on time, b4 that, and my car was repossessed. The man I got the car from is a huge di*ck. I feel like 9 days is pretty ridiculous. Is there a time frame that people have to be late to have their car taken? like at least 30 days?
if I am behind say three payments, and the company says they want to come get the car do I still have options if I can come up with one to two payments?
Can they cancel my loan out all together and it still be out for repossession even after I make this payment at a later date
My husband is a repo agent and ive seen every kind of situation if you go to pay what you have in a different car( incase the repo man is around) and they take a payment which they probably will. They can not take your car
Due to many obstacles, I have not been able to make my car payments, they have sent me a letter to buy out the car or either pay up 1400 dollars by the 11th of April, I can pay this, but I won’t be able to pay that until may first, will they allow me to make that payment or will. Excepted and still take the car away when they find it. Also, I paid 20000 dollars on my truck when I bought it, I owe 12000 more. It was a total of 26000.
Unfour is the same I call cause we got behind I try to make what I can. I called on Jan 20th 2018 to make,a payment they told me I had no ins. on my truck and was 4 payments behind I am 2 payments behind with one due today and was trying to make a payment was told it would do any good plus telling me no ins it has always had ins 6 months nothing has been said no phone calls not even when I’ve called to make payment till today 1/20/18 Not willing to work with an take my 100 dollar payment .I usually through winter stay a behind one payment but this winter has been so much rougher.Another month I will be back on track
im with ford credit and they are pretty amazing. they worked with me when i was in a tight spot and are always easy to get a hold of.
I am going to payoff several small loans and catch up on my house and vehicle payments
I had a car repossessed. They sold it an wrote it off and got zero from me. Over one payment.
I agree with many of the below. They put you down on the phone, make you feel like a scumbag for being late, then tell you to borrow the money or post date checks (which will obviously bounce), and they just go on and on about it. I tried doing payment arrangements like $50 a day till it’s paid off. They won’t do that. It has to be weekly or monthly. It’s much easier for me to come up with money daily than save it all week and it’s really hard for me to make the payment daily myself, which is why it’d be nice to set it up to auto-debit. But by all means, take the car, I’ll file chapter 7 and not only owe nothing on the car, but nothing on anything else.
I made partial payments with Suntrust after hubby lost job for 2mo and got new one at less pay, and motor was trashed in my Kia at same time savings and 401 gone, they were going to refinance until motor went. Well God is good, Kia replaced motor due to a dealership service dept negligence, then SunTrust refinanced my car at same interest with payments lowered by $158 per month, and tgey dekayed 2 mo. I did not have to make any payment. Awesome company!!! Chase on the other hand are behinds! I am going to start paying less on my own first to see if that works as it did with SunTrust. Ha ha they think we still in WI, we aren’t.
My car is financed through TFS and they will NOT help me. I even took it upon myself to call a month in advance to let them know I was not going to be able to make my car payment the following month. Nothing. Now, I am currently unemployed and I tell them the same thing over and over (I can’t afford to make the payments), nothing. I have been a customer with Toyota for a very long time and I hate to say it, but I am not please with the services that I have received from them. I will be upside down in my car if I trade it in. I’m in a lose-lose situation, and TFS has not helped one bit.
Lol
do you know if felony charges can be filed with a repo?
No, from my understanding, they can not, Repossession falls under Civil Law not criminal which means lenders or the Repo Man aren’t allowed to call the police for assistance in repossession( unless however there is an altercation and things get violent during the vehicle repossession then the police would get involved.)
Turns outs I’m 120 Days behind I’ve been trying to catch up. My car is fianced through valley national bank and they won’t work with me. I have like 2 days to come up with $1200. Help me
I’m on the same boat at the moment. How did you situation end up and what kind of action did you take?
I’m in a similar situation and I have a deadline and don’t have any of the money. I’m at a lost and don’t know what to do about it.
Chris Brenner, I don’t believe TFS agents have been made aware of the friendly policies you brag about. My vehicle was just repossessed today at around 2:00 AM. I am a TFS Borrower, never did Toyota ever reach out to me to arrange a solution. I was the one who reached out to TFS to arrange payments, on top of the payments I had been making biweekly ranging in the 600 dollars. I am a living proof that TFS has no history of reaching out to me to arrange anything. On the day I reached TFS (yesterday, a day before repossession) I agreed to pay the remaining past due balance by the end of the day. Despite the arrangement and the money on hand available to deduct. TFS picked up my vehicle. Now that the vehicle is picked up, TFS has agreed to release the car. Except I have to wait 7 days with the vehicle accumulating Storage Fees. TFS made this more difficult than it needed to be. And more expensive for me (the borrower) I wished Chris Brenner could really answer to why TFS acted in opposite direction.
I am with big shoe auto and they replied my car just for me being late 6 days now charging me 826.00 to get it back
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KIA MOTORS FINANCE will not work with you either , so avoid KIA MOTORS , this comes from recent experience
Having the same problem with Kia.will not work with you.will not do business with this fake company again.toyota is better works with you when you need help.should have stayed with toyota.
KIA MOTORS IS THE WORSE, I was only one car payment late with a few late charges, made arrangements they excepted and the next morning my vehicle was repoed….I have had the car for 4 years, on the job for 16 years laid off….smh No One gives 2 f****
TFS repossed my car at 6am Saturday morning , their billing depth told me at 9am that the repossession division is closed on the weekend . why would they take the car and you can’t do anything for 2 days. No letter and no personal contact.
I was told I am 84 days past due on my jeep payment, and I’ve been paying only every 2 weeks payments which is partial to my full payments making me over $1300 past due in total $2100 my husband has changed jobs and at this time the ONLY 1 working and I’ve been off for a yr do to knee surgery and being a home maker. I’m looking for a job to get our finances in order. Our payments have been late for almost a year, FULL payments that is, even thou I’ve been paying partial every month. My question is knowing we are that far behind and I just talked to our lender to pay some today and a FULL payment on he 30th do they have the right to repo? I’m so worried and afraid and scared of losing our 1 and only form of transportation. Yes we have explained our dilemma, but I want our account back on track and yes they extended our account 3 different times in the past 2 yrs I can’t right now so what other options do we have
I leased my car from Connecticut and my car is at risk of being repossessed now because i couldnt make payments. I am wondering if they can remotely disable my vehicle or they will track it via gps and tow it.
I have been calling TFS for help for 3 months and they always say that there is no program for assistance. I called again today now that my payment is “late” and they told me it will take 3 days for them to decide if they will be able to do an extension. if they helped me when I first called all of this would have been avoided and I would not have any late payments. So I hope your article is true and they will help me this time.
i found the best way to not have this issue. buy used from private party. no loans just cash. i have never bought a new car and never will. as my grandfather always said if you can’t afford it don’t buy it.
Hey, thanks for this really genius advice! No one knew that you could actually buy a car with cash! This is so crazy! All of our problems are now solved. You’re a godsend!
Would be nice if the cash was there.
Solution to all of your responses: If you pay even $1.00 towards your loan, they can’t take the vehicle. They will call you – do not mention you lost your job. Do not volunteer any information so they can repo your car. If you say, “I cant make my payment…” They have the right to take it. Go to a check cashing place, bring your pay stubs and get money, if you have a computer or anything in your house that has value, sell it. There are alot of options you can do to make money. We have all had obstacles come in our way, just gotta use some extra momentum to get by them. – Law 101
Hello Bruce,Is this so in Texas i know each State has diff.laws on Solution to all of your responses: If you pay even $1.00 towards your loan, they can’t take the vehicle?
I tried to pay Chrysler 250 today, and they wouldn’t accept it. Any reason as to why Bruce? I am employed with the same employer as when I got the loan, income has increased, and have made on time payments for 2 years now. Just a little hiccup for the last 2 months, but it’s almost over and back to normal, and they know all of this, and I’ve been paying them every two weeks. And all of a sudden, they don’t want to accept more than half my monthly payment, which they agreed they would do.
Your absolutely wrong, your misleading people
How exactly does this work. Someone else said the same.
That’s not true. I had a car repossessed after a $20 payment. I never said those magic words, but I was behind a month. The next morning my car was gone.
My vehicle was repossessed but 2 weeks after that the lending company still took the monthly payment out of my checking account via an ACH payment. Is that right to do?
I was a little bit late … 44 days late, to be exact, and the same day I put my check in the mail (literally) they came and repossessed my car! No warning, and I did communicate with the bank. We suffered a job loss (me) and a job layoff (husband) and although we both got new jobs, our pay is lower and we got a little behind. I was in touch with them! Now I have no car. Seriously?
I’m 30 days behind and had my bank account hacked so trying to deal with that. my lender has been made aware of the entire situation and everything going on with my bank. I was told “written correspondence” is a necessity, however they insist I call in – with new job and an hourly employee it’s hard to do. They refuse to work with me to extend my loan in order to lower payments (however it’s more money for them in the long run). I think they are going to repo.
Just curious, how was your bank account hacked? I am a senior and any information on how to keep my account safe is appreciated, thank you very much.
I have one car payment left. I am already late .Between being sick and having car trouble i do not have the payment they want this friday. They said they can not wait another week and will repo my car. Im freaking out a little. I cant find any way to get the money
For just one payment, you might want to call the bank an ask if you can make a partial payment or even borrow money from a relative. It’s going to end up costing more if the car is taken back.
I need help am 2 payments behind
Yea right I came up with the money to get my car back but “Crysler Capital” would not take the payment because the money was not being sent from the co signer. Chrysler Capital is a BS company!!!!!
I have them 2
Yes Sir!Totally Agree!
If they refuse any kind of payment no matter who makes it, you should not have to pay anything else. Your debt should be considered paid.
Yeah, well what if instead of talking about repossessing the car after ONE missed payment, you get sent to an attorney and court instead? I’ve only missed ONE payment and this is the action my lender decided to take. Is that even legal?
Go to their website and review their terms of service. Press Ctrl+F on your keyboard and type in payments. It will search the document/page for that word and will make a 2 hour reading into a 10 minute reading.
I have heard that you have to be at least 3 months behind on payments but every financial institution is different. Good luck and God bless.
My name is Breezy Medi, am here to testify to the world on how i got my loan of $100,000.00 from Sydney Ethan who works at SGR Marketers Company. If you need a loan of any kind, just contact SGR Marketers for a safe and secured loan. Sgrmarketers@gmail.com
Do they do credit checks?
Thank you for posting this because i have not financed anything yet in fear of spur of the moment problems that may occur