What happens if you let one car be reposessed so that you can buy another?

Question

First, a little background.

Me and my husband bought our first vehicle in September of last year. We had been using his father's Ford Expedition before that, and he needed it back. Me being pregnant, we panicked. We didn't really do our research or think clearly about the decision and kind of went with the first thing we saw, in fear of being without a car.

We bought a 2006 Saturn Ion. We are ready to become pregnant with our second child, and found a Ford Explorer that we really want. BUT we owe $5000 more on our car than it is worth. Making our finance amount go from $16000 to $21000. The bank will not finance that much for the Explorer because it isn't worth that much.

We are desperate. What would happen if we went ahead and got the Explorer, without trading in our Saturn, and then let the Saturn be reposessed?

Other than the obvious tarnish to credit. We can't afford two car payments, so it's one or the other.

Thanks!

Thanks for that man, I have one kid. Jeez. Anyway... I guess what I really need to know is, can they reposess the Explorer as well?

Answer 1

Repossessions never look that good on a credit report. And if both are financed through the same bank, some banks can and will actually repossess both cars, even if you fall behind on one. If I were to see that on your credit application if you wanted to rent one of my condos, I would probably decline your application.

Rather than deliberately mar your credit like that, I would suggest a little patience and take some steps to ensure you can afford the car you really want. Among those:

1. Wait to buy the new car. Even if it's a used one, another one will eventually come along - one that might even be a better deal.

2.Over the next few months, try to pay down that negative equity on the Saturn by making extra payments or sending in extra money with your payments. Be careful, though, because some car contracts, particularly those made through dealers, have penalties for prepayments like that. But assuming it doesn't, something as simple as rounding a $365 payment up to $400 is usually doable for most people and can save interest and cut months off a car loan.

3. Does it really have to be a Ford Explorer? There are lots of similar vehicles in that class that could be a better value.

4. Perhaps the value you are being given on your Saturn is the trade-in value at the dealership, not the retail value. Maybe you could sell it yourself for retail and pay off most, if not all of the loan balance and then be able to afford your Explorer. My wife and I found that most dealers will only give us $6k for our car, but we can easily resell it for $11k. We're putting it up for sale at around $10k which should ensure a quick sale, and we pocket the extra $4k, rather than the dealer.

Do not fall prey to consumerism and get yourself in trouble. Show a little patience and determination, and in the end, the payoff will be worth the wait.

Answer 2

No they can not repossess the explorer as well it has nothing to do with the collateral on the original loan. It will hurt your credit however make sure that the first loan is processed completely before letting the other one go. I see a few people do this don't expect to be able to get another loan for a couple of years and then you will still pay more interest then without the repo. Also don't let people tell you there is a difference between a voluntary and involuntary repo there is no difference. The bank that has the Saturn loan will come after you for the deficiency you should try to pay it then it would show as a paid charge off which looks a little better. One other thing to think about right now the 2006 explorers have great rebates I don't know your situation but if it is only $5000 negative equity they can trade you out of it in a new explorer without having to ruin your credit. I hope this helps a little.

Answer 3

The lender of the first car loan will come after you after the repo to pay CASH for the difference between what they sell the car for at auction and the loan amount. The auction price will be much less than what you can sell it for. PLEASE PLEASE sell the car your self and save 7yrs of bad credit. A repo is almost as bad as a bankruptcy. You insurance rates ( all kinds of iinsurance) will be higher, employers may not hire you because of bad credit rating, any future mortgage will be much more expensive.....no good can come of a repo.

Besides it is poor character for anyone to promise to repay a loan and then voluntarily not do so. You are about to be parents and the best way to teach children good character is for you to live it as an example.

Perhaps you can refinance the car loan until you can sell it. Also call the lender and explain the impending birth and ask for an extension, or delayed payment, or wha help they offer. THEY don't want you to have a repo either, it cost them more money than a few delayed or rescheduled payments. Whatever you do don't stop making payments and refuse to answer their phone calls. They will help you but will loose all concern for you once you won't talk to them.

My wife works for a big lender and tracks down vehicles for repo and collects on late accounts. I promise start this way first and they will work with you as much as they can. If nothing else works you can make a "voluntary surrender" at a dealer that will save $200 but is still a repo on your credit report. By The way if you still have the repo and some emergency comes up where you have to borrow money you are screwed, and screwed for the next 7 years.

Answer 4

It is unlikely that you will loose both vehicles if you surrender your Saturn to the finance company unless they are financed by the same company. However you may have a hard time getting financed with one outstanding vehicle unless you have a good debt to income ratio to show the creditor that you can handle both car payments. Otherwise they are not likely to approve financing on the explorer if they don't think you can handle both payments. If you do surrender the saturn they will auction it off, apply the profit to the balance, and make you responsible for the balance. They can take you to Court, put a judgment on your property or garnish your wages. Unless you file for bankruptcy you are responsible for the balance after the auction.

Answer 5

YO wouild default on the loan and the bank would reposess it. They are supposed to have it auctioned off and pay that amount on the the amount owed. Than usually they sue you fo rthe balance. This can result in much higer than the current balance a some banks purposely sell the car at a smaller amount to a dealer they are connected with , collect a gratituty form him and sue you for the difference.
Legall unles you sign the car over to the bank informing them of the your intentions and give them a chance to work it out the sherriff's offic eis suposed tosel the car to the higher bidder after giving notice to you, and as notic ein the newspapers of your default. I would bite th ebullet and pay for it and wait on another car. you'll probley come out ahead as you are going to pay for it either way. If the banks take sit they may for example;If the car is worth 12,000 sell it for 3000 and leave you oweing the other 9000 plus court costs, auction costs, and you;'ll still find the car on one of their cat lot son sale for 5000.
Think it over as it's likely you will end up paying either way and driving it while paying for it is better.

Answer 6

When the bank reposses your car, they will most likely auction it off. They will put that money towards your loan and then you will still have to pay the rest of the loan off...also, it's really not worth ruining your credit. It's very easy to ruin your credit, but very hard to get it back. Try to sell the car for as much as you can and buy a used car.

Answer 7

If you must do this, take the car back to the bank and give them the keys, they won't like it, your credit will be damaged but a least you did it face to face. Expect to pay a higher financing rate due to the negative credit report. Good luck.

Answer 8

This is why prices are so high on cars. We pay for ours & yours.
When they will repossess car, then sell at auction for less than half of what you owe, then they will get lien & the courts can deduct from your paycheck or attach to your new vehicle or items you own at home. Think carefully!

Answer 9

The same thing hapopened to us. We had two cars and couldn't afford both payments so we got rid of both cars and bought another one with a lower payment. Yes ours were reposessed also. Now our credit is not good either.

Answer 10

You'll probably loose both your vehicles and never get a loan again. You're better off you try to sell the ion outright and see what you can get for it, pay off the loan, then get the explorer♥