No matter where you are in life, debt can weigh heavy on your shoulders. Depending on your situation or in the event of an emergency, it may be crippling.
When you begin to default on your vehicle loan, repossession on the part of your lenders is more and more likely. This may stack your stress even higher since holding down a decent job becomes much harder without a car in the US.
In the event of a repossession, it is important to understand what challenges you may face.
The moment you default
As the Federal Trade Commission describes, a lender may repossess your vehicle after you default or at any other point stipulated in your contract. Provided they do not breach the peace, they have the allowance to enter your property and take what is theirs.
Depending on your agreement, a lending company may install built-in kill switches—preventing you from driving the vehicle if you default.
The weeks after repossession
Once a lender retrieves your vehicle, they may hold onto it or sell it. If they hold onto it, you may have the option of paying down what you owe and retrieving the vehicle.
In the event of the lender selling it, that money goes against what you owe on the loan. If there is a balance left over, you may still owe that.
The solutions during and after
Bankruptcy may help you keep your vehicle and maintain some control of your finances, as it pauses most collections from lenders and may put a stay on repossessions. It is important to investigate your options when defaulting on your loans becomes reality.