Behind on Car Payments? BBB Advice on How to Avoid the Repo    Man

 

        As the economic slump continues, many people are struggling to make ends meet, and unfortunately, vehicle repossessions are now on the rise throughout the country. Having a car repossessed hinders more than just a car owner’s mobility; it has a severe impact on credit scores, thereby limiting the ability to get loans or credit cards for up to seven years.

        According to the American Bankers Association, the number of direct auto loans that were at least 30 days delinquent increased from 2.03 percent to 3.01 percent during the first quarter of 2009, and delinquent auto loans through dealers hit 3.4 percent in March. Perhaps not surprisingly, the number of repossessed vehicles jumped 12 percent to 1.67 million nationally in 2008 and is expected to increase by another 5 percent in 2009, according to Manheim Consulting. 

        The worst thing you could do when falling behind on a car payment is to bury your head in the sand and ignore the problem.

        As if car owners didn’t need another reason to avoid the repo man, if a lender chooses to sell the car at auction, and it is bought for less than the outstanding loan, the original owner may still be on the hook to pay it back in addition to added fees—essentially paying for a car they no longer own.

        The BBB recommends car owners consider taking the following steps when falling behind on car payments:

·         Contact your lender.

·         Cut costs elsewhere.

·         Choose a less expensive vehicle.

·         Do your research before enlisting any debt management help.

    For more advice from BBB on managing personal finances and debt, visit www.bbb.org or call us at 337-981-3497.