Can you still owe money after your car is repossessed?

Even though you don't have the car doesn't mean you don't have to pay back the money that you borrowed to purchase the car.

You signed a contract to pay a certain amount of money in a certain amount of time. The bank sells the car at an auction, deducts what they sold the car for from the balance you owe, and then you owe the remaining balance.

You are obligated to pay this, and if they take you to court, they will win most of the time.

Answer

The A 2 your Q is YES!

Even though your car has be repoped, you are still liable for any and all cost incurred by the financier.

For example, I sell you a car for $6k, you pay me $1k back and stop paying me. I have the car repoped at a cost of $350.00 and sell it at auction where I only get $3k for the vehicle. You still owe me the difference of the balance when sold at auction. So we have $5k still due, with all late fees, + $350.00, + the court costs and attorney's fees that have been awarded by the state. Let's just say the balance is back up to the original loan amount of $6k at this point, minus the $3k we got back at auction. You still owe me $3k!

Answer

You would be better off continuing to pay for the car!

Why let them take it and have all that extra money added onto your current loan, let them get a judgment against you, garnish your wages, freeze your bank account or place a lien on any real property you have?

In the long run, it will cost you more than the $7k you are currently in debt for.

If you are in a financial hardship call the bank and work something out with them. Tell them your dilemma and see what can be worked out. What do you have to lose?

Answer

USUALLY YES

Sometimes NO. Several things can happen. If the car is repossessed and sold for less than the ammount of the money still owed then the person owes the balance technically. Here are the scenarios:

1. YOU OWE In practice though sometimes if the debt is only a few hundred dollars they wont bother collecting the money. They just charge it off and damage your credit for 7 years. If its over 1000 they may try to collect the debt. They only take a percentage of such accounts to court. But even when they dont go to court they will definately blacklist you on your credit reports from Experian TRW, Transunion, and Equifax. This stays on for 7 years. My estimate is they take legal action a third of the time.

2. YOU OWE BUT YOU PLEA IT DOWN.. This happens often with voluntary repossessions. In this case the debtor tells his finance institution who financed his car he cant pay. He volunteers to return the car in exchange for no further obligations. If the bank agrees then returning the car will satisfy the debt. BUT dont agree until you get it in writing. Make sure you do this before getting the car and be sure you have someone with you to guard the car when you do this. Without a court order they cannot repossess with someone in the car. This plea bargain deal usually can happen within the first few months of having the car or toward the end of the deal. They will often do this when they know the car is in good shape or still under warrenty.

3. EVEN STEVEN They call it even. They repossess the car and sell it for the exact balance of the loan. You then owe nothing.

4. THEY OWE YOU...This happens when they sell the car for more than the car loan. Then they must pay you the difference. Say you owe 5000 out of a 7000 loan then they owe you roughly 2000 dollars.

IN CONCLUSION when the car is sold after repossession they must inform you of how much it sold for.

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