Americans owe more than $1.1 trillion in automobile loan debt. As of the end of 2018, more than seven million auto loans were seriously delinquent—the highest number on record. People whose credit scores were below 620 when they took out their loans have the highest rate of delinquency, but it’s not necessarily because they were a bad risk. Borrowers with lower credit scores generally get worse loan terms, including higher interest rates, which means their loans are more expensive.
Falling behind on a car loan can be more stressful than other types of debt, because of the risk of repossession. But, fear-driven decisions are usually bad ones. If you’re struggling with unmanageable automobile debt, it’s time to step back and assess your options.
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The Problem with Motor Vehicle Loans
Automobile loans are typically secured by the vehicle. That means the lender takes a lien on the car or truck, and that lien stays in effect until the loan is paid off. One serious problem with this system is that the value of an automobile drops significantly almost immediately. That means that shortly (or immediately) after purchasing a car, many people owe more money on their car loans than their cars are worth.
For people struggling to make car payments, this negative equity can limit traditional options like selling the car or trading it in, which can be difficult or impossible. And, if the car is worth less than you owe, you could lose the vehicle and still owe the lender money.
It sounds bad, but don’t assume the worst. Don’t allow yourself to be pressured. There are options you may never have considered, and we’re here to tell you about them.
Managing Motor Vehicle Debt
The best way to push back on automobile loan collection efforts depends on your goals, and on where you are in the process. Your options will be different if you want to keep your car than if you just want to get out from under the loan, or your car has already been repossessed and the lender is pursuing you for the remaining balance due.
There are strategies for delaying or avoiding repossession, strategies for settling debt for less than you owe, and in some cases even strategies for avoiding payment altogether. You may even have claims against the lender or debt collector that will give you leverage to negotiate the outcome you want. In extreme cases, the debt collector may end up owing you money for violations of one or more consumer protection statutes.
DebtCleanse™ Can HelpWe’ll give you the strategies and resources you need to put debt collector stress behind you.
When you sign up with DebtCleanse™, we’ll team you up with an attorney in your state. Your attorney will notify collectors to direct any future communication to their law offices. This should immediately stop harassing calls and letters.
Your attorney will also interview you and comb through your documents for potential violations of the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Telephone Consumer Protection Act (TCPA) or other federal and state laws. Those violations can create leverage to challenge your vehicle loan debt and other types of debt. If creditors and debt collectors don’t follow the law, your attorney can hold them accountable.
Often, debt collectors stop collection action as soon as they receive a letter from an attorney, focusing their efforts on people who are less likely to fight back. And, many consumer protection statutes require debt collectors who break the law to pay your attorney’s fees. So, our members may be able to resolve debts without paying anything beyond the enrollment and membership fees.
DebtCleanse™ can put you back in control with creditors and debt collectors.