I need info about relinquishing a vehicle?

Question

My son has a very expensive truck that has a co-signer on the note. The co-signer is my friend and we are not having any friendship problems. The problem is that my son was recently dumped by his fiance. That completely up-heaved his life to a point that he was physically sick and missed a lot of work. Not only can he not make his note this month, but he has realized that if he is ever going to get ahead he cannot put all of his income into a truck note. We feel that if he tries to sell the truck himself he will not get the money that he owes out of it. Additionally, the bank has been very uncooperative concerning his insurance. We have proof that he has had insurance the whole time he has had the truck and the bank refuses to accept it. They are tacking an additional $400.00 or so per month for thier own insurance. The monthly note is over $1000.00 per month now.
How will the act of relinquishing a vehicle affect the signer's and co-signer's credit score? I need good answers fast!

We live in Texas

To Markmywordz:
The bank will not accept any info from us and say that he has NO insurance. They will not even send him an itemization of what the costs are for!

Shaun:
We have had the insurance company fax the info to the bank at least 4 times. they just don't seem to get it.

Answer 1

If you can provide documentation proving that the vehicle has been insured (with the proper coverages and deductibles) and the bank has been listed as the lienholder, then refuse to make the additional payment for the "forced placed insurance."

If your son decides he can't make the payments, advise him to try and work with the lender and avoid a repossession. If your son surrenders the vehicle to the lender, it will still be a repossession on his credit report. Voluntary or involuntary repossessions have a huge negative impact on your credit score, avoid if at all possible. Your son will be better off to work with the lender to sell the truck and then borrow money from the lender to pay the remaining balance of the loan.

If you surrender the truck, the bank will sell it at an auction and your son and your friend will be held responsible for the balance. They'll end up with damaged credit and an outstanding debt.

Good luck!

Answer 2

Its hard to believe that $400/month that they are charging is just gap insurance. Usually its about $15-30. Make sure that they aren't trying to sell you life insurance too.

Considering that your son needed a cosigner for the loan in the first place, letting the truck go "back to the bank" would be extremely damaging to his credit - probably keeping him from getting further loans in the future. All future loans would require cosigners, and because of such a bad mark on his report, he would be forced to high interest rates, due to what the banks consider "high risk".

I have a hard time understanding that the bank wouldn't work with you. Get in writing why the bank won't accept your current insurance, and take it to your personal insurance man. Your insurance man might even have some advice to possible legal action, or even reporting the bank to the Better Business Bureau.

Give the bank a little threatening, by telling them that I can no longer afford it, and am considering just stopping all payments. If you owe more than the truck's worth, they won't want it back either.

Another option is to find a different lender to take over the loan (without all the BS that the current bank is giving you).

A more extreme (read: illegal) option - Assuming that you have gap insurance, you could just total out the truck. Your insurance will pay what it's worth, and the gap insurance covers the negative equity. A coworker of mine (car salesman) once told a guy that wanted to trade it on a different vehicle, but owed $5,000 more than it was worth, "the only way to get a new car is to go burn the old one." 3 weeks later, he ended up coming back in with a check to buy a car. This is obviously insurance fraud, and I'm adding the story more for amusement (although true)- consider it as an absolute last resort.

I wish you the best luck with this problem.

Answer 3

You and he have to realize that even if he gives the truck back he will owe the difference. So you should keep the truck and pay the entire note, even if it means you have to bite the bullet for a few years.

You are obligated to pay the note off. If he doesn't, then his credit score will be lowered for a good reason.

And you are accusing the bank of doing something they are not doing. You just don't understand what they are trying to do.
The bank is realizing that you don't have enough insurance on the truck to pay it off if it is totalled in an accident. This is because you are still upside down. You are basically paying for what is called "GAP" insurance, which pays the full balance on the vehicle not just what your insurance will pay. Your insurance will only pay the fair market value of the truck if it is totalled in a wreck. The fair market value is what you would currently pay to buy the same truck off a used truck lot right now. You clearly currently owe more than the fair market value, so there is a risk there that if it is totalled the bank won't recoup all of what you owe it, so they are making you buy GAP insurance.

At some point in the next few years, you will finally be rightside up on the value of the truck. You can drop the GAP insurance and sell the truck for more than what you owe....pay off the bank and finally be done with it.

A tough lesson from the School of Hard Knocks.

Answer 4

Have the insurance company fax a copy of the insurance policy to the bank. Usually that is what we have done. He doesn't HAVE to have GAP insurance. That is or should be called cover you butt insurance. You can try to refinance the vehicle through someone else. I have done that to get a better interest rate. That may bring the payments down. Sometimes this is difficult. I would only return the truck as an absolute last resort because yes, when they resell it he will have to pay the difference in what he owes. Maybe he could get a second job to help pay down on the truck? I have a friend doing that now. By the end of this year, he can sell his expensive car and get a cheaper one or refinance what he owes so the payments are lower. Good Luck and I hope it works out:)

Answer 5

As for the insurance charges, have you read the contract and followed the lenders requirements on the amount of insurance that is to be carried? If your son isn't carrying the required amount they may have put forced placed insurance on it to bring it up to the requirements.

Read the contract. If your son "is" carrying the required amount then the lender should not be charging him.

Have you sent a request "in writing" that you want an itemization for it? If not, you should. Plus you should send it certified mail return receipt. Tell them, since you have requested it previously without a response, to respond within 20 days.

If they do not respond, contact your state insurance commission (thats where having things in writing comes in handy) and maybe file complaints with the state banking authorities and your states attorney general.

As for turning the truck over to get out of the payments, more than your sons and your friends credit will be dinged.

It will be considered a repo, and repo's generally runs this way:

They will repo the vehicle and sell it for somewhere around 50% or 60%, more or less, (if you are lucky) of the worth of the vehicle. "Not" what your son owes, but what the vehicle is worth, which more than likely is less than what he owes right now.

For instance, if your son owes $20,000 on the truck right now. And the truck is worth somewhere around $18 to $19000. It may sell for somewhere between $9,000 to $11,000. So that would leave your son with a balance to pay of somewhere between $9,000 to $11,000. (not counting repo fees)

Then, they will add on the costs of the repo. Which could run up to a couple of thousand. Though the costs generally run somewhere around one thousand more or less, they could run higher.

Then, after the vehicle sells, they will come after him and your friend for the deficiency + fees. If the deficiency+ is not paid, they may and probably will sue to recover it. They will not only sue your son, but your friend as well. Which will up the price due to court costs.

He would be better off selling the vehicle, even if it is at a loss. And pay the difference when he pays the loan off.

Or keep the vehicle and keep up with the payments.

Keep in mind that whatever your son will be going through with this should he do a voluntary repo - your friend will be dragged through it to. Whether it is a credit report ding for a repo or a court judgment.

Answer 6

he can sell the truck but the difference still has to be paid
either him or his co signer will have to pay as they are both responsible for the loan

Answer 7

I'm certain that you must find all financial solution at= financial-care.info-

RE I need info about relinquishing a vehicle?

My son has a very expensive truck that has a co-signer on the note. The co-signer is my friend and we are not having any friendship problems. The problem is that my son was recently ...show more