What repossession means for your credit

Car repossession is a real nightmare. No really, it might be worse than you think. It can lead to paranoia, loss of job and sleepless nights. Sounds like one of those bad prescription drug commercials doesn’t it? If you’ve been through repossession you’re probably shaking your head in agreement as you read this right now.

Car repossession is a real nightmare. No really, it might be worse than you think. It can lead to paranoia, loss of job and sleepless nights. Sounds like one of those bad prescription drug commercials doesn’t it? If you’ve been through repossession you’re probably shaking your head in agreement as you read this right now.

Here’s the quick and dirty outline of the repossession process:

1. Oops - You miss payments anywhere from 60+ days and take about a hundred collection type phone calls asking where your payments are.

2. Bye-Bye – They will come and take it. They don’t care that you need your car to go to work tomorrow or to drive your kids to school in the morning; they will take the car. Remember how I said there would be paranoia and sleepless nights? If you attempt to hide the car etc., they will not hesitate to follow you, come to your work, and show up at your parents’ house looking for the car.

3. Sold! – After they have taken the car, and they will, your car will be sold at auction in as-is condition. You can bet that the car will be sold at a significantly lower price than what you own on it.

4. It’s over right? – Unfortunately no. You didn’t think they would just eat the difference between what you owed them and what they got for the car at the auction did you? You can plan on a collection account or a judgment for the difference plus any repossession fees and whatever else they can tack on there.

5. Effects on my credit report? - After all is said and done a car repossession will cost the average person anywhere from 120 to 170 points. Additionally you’ll likely be paying off that car you don’t even get to drive for years to come making it pretty difficult to get to and from work as well as buy a new car in the future.

If you’re facing repossession the best piece of advice I can offer is to contact your lender as soon as possible. The man or woman who calls five times a day from your car loan company or the tow truck driver hunting you down aren’t really the best people to speak to. Call the lien holder and ask to speak with a manager and plead your case to set up an extended payment plan. If you’re laughed off the phone and told to dream on, you may want to consider asking that friend you didn’t want to ask for a loan to avoid this whole expensive mess.