If my parents voluntarily turn in their car for repossession, can the loan company still force them to pay?

Question

We live in Georgia, USA.

My folks are considering turning in their 2005 Ford Focus. They are some three months behind on the payments.

They asked if they could turn in the car to the dealership where they bought it, and were told that they may do so. But, they were told that they would STILL have to pay the remaining balance owed!

My parents got ripped off BIG TIME with this car. The car is worth maybe 12K BRAND NEW. As it sits now, the car may be worth 6 or 7 Grand.

They have made about two years worth of payments, but they STILL OWE like 10G's on the blasted thing.

Is there anything they can do?

Could they sell the car to Carmax? Will Carmax buy the car without my parents having the Title? The Title is at the bank. My parents could furnish the Title if Carmax buys the Focus, and my parents in turn pay off the balance. But would Carmax be willing to do this?

How much would Carmax say that their car is worth?

Any ideas on what we can do to preserve the car?

Hey Jon Mac-

Thank you for responding. Thank you all for your insight.

The reason I think that my folks got ripped off...well, reasons..plural...?

Well, the car should probably cost around $200 per month. The car notes are twice that much. The interest rate is inordinately high, and if you include the insurance, which is about $125 per month, they are paying about $500 per month for this little economy car. Does that sound like a good deal to you?

My folks have poor credit. They went into the dealership, and were told that the new Ford Focuses costed around $200 per month. They made an impulse purchase, and didn't even shop around for a better deal. It is partially their own fault for not being wiser shoppers. They just grabbed the first car they went to see. You should NEVER EVER buy a car the same day you go look at it at a dealership. Don't you agree? The salesperson assumes that he or she has you "under the ether."

Hey Jay-

thanks for your answer.

But can my parents sell this car, since they don't have the Title??

Since they are financing the car (obviously), the finance company has possession of the Title.

How can they sell the car without the title?

Answer 1

"Market Value" is typically retail value, and they will not credit you that amount. They will send the car to auction where it will sell for wholesale value, which is close to a dealers trade value. That will be a huge loss, that your parents will be required to cover. Sell the car privately, you will get more that way, and work out a way to pay the loan. Do not under any circumstances let the car be repo'd or turn it in.

Answer 2

Yes, they would still be responsible for the balance owed on the loan. What will happen, is the car will be taken to an auction, and sold for pennies on the dollar. That money will be applied to your parents loan, leaving them the remainder to pay. Avoid a repo at all costs, it will destroy your credit for a number of years, purchasing another car will be problematic, and your parents simply won't get ahead by giving the car back, better to do whatever you can to get the money to the lender. The Focus is a low end model car, are sold for far more than their value, and at auction, will be sold for hardly anything. Carmax is not in the business of purchasing cars, especially ones where the title is not available, they would never pay 10,000 for a Focus anyway. Sounds like they signed up for a long term loan, with interest rates a bit high, and paid too much for the car to begin with. Lessons are learned everyday, add this one to the list.

Answer 3

Yes, it can. Years ago, my husband bought an 18-wheeler that priced out at $110,000. Needless to say, he wasn't able to pay that huge note. So, he voluntarily surrendered the truck back to the dealership. They in turn, sold the truck at a sheriff sale / auction, and we were still responsible for the balance owed to the finance company. It basically shows that a large chunk of the amount was paid, but, it will show a remaining balance.

Answer 4

The loan company will credit back "market value" on your vehicle, minus any late fees and outstanding payments.

"Market value" is always considerably less than what you owe on it.

So you owe about $10,000 and it's worth $6,000 now, the loan company may give you a credit of $6,000 for the car.

This means you have no car but still owe the loan company $4,000 plus any late fees and outstanding payments. and your credit's ruined.

Carmax will not buy anything without a title or anything that has been repoed.

Good Luck

Answer 5

A 2007 Ford Focus sells for $13,715 - $17,550

depending on milage and options of your 2005, it should be worth 8 to 10,000

Why do you think you parents got riped off?

Answer 6

basically, once it is repossed, you're parents will still be responsible for the loan---but the car company will auction it off for a price and subtract that from what is owed on the vehicle, you're parents would be responsible for paying the difference. (also, no carmax will not purchase it w/out the title up front.)