Financial strife can happen to anyone, whether it is the loss of a job by layoff or perhaps an injury which forces one onto unpaid leave. Vehicle repossession can stay on your credit report for up to seven years from the day delinquent payments started. That is the reason we advise you to undertake timely measures to remove repossession from your credit report.
Of course, it will lessen over time, but it’s best to avoid if possible. Though it can seem an impossible task to recover from delinquent car payments, it is not so. We’ve compiled some helpful tips to get you over this hurdle if this seems like an unfortunate impending circumstance.
Attempt Negotiation with Your Auto Lender
Before it reaches a point that you stop making payments due to financial hardship, try calling the financing company to discuss your situation. Financial companies extend loans all the time, and they ultimately hope that they will get their money back from the consumer by a finished loan repayment. The majority of the time when something is repossessed, the goods are sold at an auction for half of the contractual obligation, which doesn’t benefit the financial company in the least. So, in the end, it’s best to contact your financial institution and try to arrange a payment plan or loan extension.
Dispute the Repossession
An advanced option to consider is disputing the repossession of your vehicle. It is essential to examine all details closely when repossession takes place. There’s a much better success rate if you determine any and all inaccuracies. Here’s a list of all things you should be looking for:
- Account Numbers
- Payment terms
- All dates
- Anything else that’s inaccurate
Review the Laws
Each state has different laws for how goods are repossessed. Take the time you need to review the laws in your specific state. If a creditor violates the laws in regards to possession in your particular state you may be able to have to repossession overturned and removed from your credit report accordingly.
Voluntary Surrender vs. Repossession
If you choose to return your car to the lender the account will be reported as a “voluntary surrender” rather than repossession. There is a significant benefit to a voluntary surrender instead of repossession. It demonstrates that you are proactively working with your financial company to resolve the debt and take responsibility for your economic issues.
Consult an Attorney
It may be tempting to discontinue payments because you feel misled about the condition of the car you purchased, but please refrain from this. Consulting an attorney is an excellent idea in this situation. An attorney can help you resolve this issue rather than having your credit marred by repossession.
Your state’s laws and your loan agreement may give you the option to reinstate your loan. This is significantly less costly than redeeming your car before it’s resold. You will have to make up all your missed payments in addition to fees, but you don’t have to pay the entire loan balance.
Rebuilding Your Credit
If your vehicle does end up being repossessed, it will take some time for you to repair your credit. There is some good news though so don’t fret. The effect of any negative marks on your credit reports will disappear over time, and there are ways sooner than later for you to get this process started.
You could, for instance, get a secured credit card and try to continue making timely payments on any existing loans or credit cards. You can also work to restore your credit after repossession by stacking up positive credit marks to offset the negatives.
Here are three verified tactics to get this rolling:
- Try to use only a small portion of your available credit. The next biggest factor in your score is how you utilize your credit, which is how much of your available credit you use. Experts say to keep it below 30%, and much lower than that is even better.
- Make timely payments: Payment history is the most significant single factor used for determining your credit score, so be sure to pay each and every bill on time and in full.
- Consistently check your credit reports: About 20% of credit reports have errors, and about 5% have mistakes of the type that might drag down your credit scores. You can dispute inaccurate information on your credit report and ask for it to be removed.