A car loan default can set many negative things into motion. If you find yourself unable to make your car payments on time and do not have any money to pay for a rollover, your car may be seized by a lender. What usually happens is that your lender will contact a wrecker company that specializes in repossessing cars, and most likely you will wake up one morning to discover that your car is no longer parked in your driveway. A car loan default is what happens when you fail to make your monthly payments which essentially means you forfeit the ownership of the vehicle mega wreckers.
Every lender has its own rules and procedures set in writing that states specifically the terms of their car loan default policy. Some lenders will come after your car within hours of your first default and will put the car into a storage facility so that it can be resold at a later date – with all of the proceeds going to the lender. Other lenders will give you a set grace period in which you can attempt to catch up on your payments. If your car does end up being seized and you are somehow able to come up with the money to pay off your loan, you will be responsible for paying any storage fees as well as some hefty penalty fines before you can pick your car up.
Car loan default is serious business. You could end up facing a lawsuit and even have your wages garnished to pay off any outstanding balance you still owe on the car. It is therefore imperative that you do everything in your power to avoid a car loan default because it could have very serious repercussions for you financially speaking. Not having your vehicle anymore could also result in you losing your job if it was your sole means of transportation. Tens of thousands of Americans default on their vehicle finance each year, and as a result these consumers find that their credit is harmed for several years following their failure to make good on their auto loans.
In order to avoid car loan default, be sure to set a monthly budget and stick to it. You need to look at your car loan as a serious obligation, just as you do with your rent, mortgage or utility bills. Controlling your spending habits can go far in helping you to avoid facing a car loan default. Resist going on frivolous spending sprees and consider clipping coupons to help stretch your personal budget. If you know that you will be late making a car payment, contact your lender immediately and inform them. Quite often lenders will offer you a bit of flexibility so do not be afraid to ask.
Having a car loan default on your credit report will make it very hard for you to obtain vehicle financing in the future, or any other type of loan for that matter. You also will have a very difficult time getting credit cards and mortgages so be sure to keep your credit report clean.