Some Advice... Auto Loan

Landers · #1 (**permalink**) 07-09-2007, 08:34 PM

Hey all, any help that someone can offer me would be appreciated...

I lost my job about 2 months ago. Finally got another one and start in 2 days... however.. Being without a job I haven't been really able to pay off my auto loan. I've been incredibly tight on cash. I'm now 60 days late on payments.

At one point I thought that I'd be able to pay off the 2 months payments and talked to them over the phone and said I'd be sending a check. Something came up later that day and I was unable to fulfill that promise. Now, I've received a letter saying that I've defaulted on the loan and that it is being sent to collection. The total equaling around 6500. Does anyone have any recommendations for me?

How badly will this affect my credit? How should I go about dealing with this, I don't exactly have 6500 dollars...?

Any other advice would be great...

TIA.

- C

Mark A · #2 (**permalink**) 07-09-2007, 09:05 PM

Well, aside from them being able to tow your car off now, get ready to make three copies of every bill and payment having to do with the collection agency. This is the CYA principle, which stands for Cover Your *ahem* behind. Make sure that you start paying them as soon as possible whatever you can afford.

Having a loan in collection will torch your credit, you need to pay it off as soon as possible, plan on living like a college kid for a while (10 packs of ramen for $1.00)

You've got some ground to make up but you're not in a bad situation, unless there is credit card debt that you're not paying on either.

Landers · #3 (**permalink**) 07-09-2007, 10:32 PM

I have CC debt, but i'm making payments.

Would I have to set up a payment plan with the collection agency? I mean how do you pay it off in that situation.

Mark A · #4 (**permalink**) 07-10-2007, 12:50 AM

Be very willing to negotiate, free up as much money as possible and pay it off faster than the agreed upon renegotiation.

Dru · #5 (**permalink**) 07-10-2007, 01:33 AM

If they tow it, they will sell it at a discount and you will be on the hook for the remaining balance. If you have any equity in the car, you should see if you can sell it quick and work out something with the bank or collector. At least you will have gained the most for your car as you can and minimized the damage and collection fees.

Landers · #6 (**permalink**) 07-10-2007, 06:40 AM

Quote:

Originally Posted by Dru

If they tow it, they will sell it at a discount and you will be on the hook for the remaining balance. If you have any equity in the car, you should see if you can sell it quick and work out something with the bank or collector. At least you will have gained the most for your car as you can and minimized the damage and collection fees.

That's what I was thinking... but I thought once it went to collection I was unable to sell it as they won't turn over the title without the balance in full... it wouldn't be a problem if that was done, at least transportation wise.. I have a motorcycle that I own outright...

Dru · #7 (**permalink**) 07-10-2007, 12:56 PM

Getting them to release the title may take some work, but if you show them what you are doing to fix the problem they should see it is in their best interest. If there is an unpaid balance, they will still expect you to cover the difference. If you can manage that payoff now, the title release will be no problem. Otherwise you will need to work out a payment plan with them.

Have you looked at options to raise money? Do you have things of value you could sell, available credit, family members who could help? If it is only a few hundred dollars that you are short, those options may be better than an agreement with the credit collector.

Landers · #8 (**permalink**) 07-10-2007, 02:26 PM

I wish it would be only a few hundred... I'd probably get abotu 3k-3.5k for the car. It's been going downhill on its own the past few months as VW made an error with their software which they have yet to come out with a fix for.

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