Advice on turning a car back in??? Thanks!!!

[rodscamaro]

I have a neighbor who's going through some tough times and can't afford his car or motorcycle(harley). He seems to think, if he gives them back to his credit union they'll eventually come after him for the unpaid balance after auction. I remember another friend who went through the same thing and his finance company never came after him. Does anyone know what will happen to him if he lets them go. He's married and a homeowner, just got out of the military and is having trouble getting a good job.

[nova]

First thing he needs to do is get out of the realm of "I think" and get into the realm of "I know."

Go up to or call the CU and just ask them. "I'm having financial trouble, what would happen if I turn in the vehicle to you and the auction doesn't cover the loan balance." Sometimes that outcome can be negotiated if you turn it in because then they don't have to pay for repo.

Once he knows what will happen, then he can start deciding what the best course of action is.

[Xanthos]

Originally Posted by nova

First thing he needs to do is get out of the realm of "I think" and get into the realm of "I know."

Go up to or call the CU and just ask them. "I'm having financial trouble, what would happen if I turn in the vehicle to you and the auction doesn't cover the loan balance." Sometimes that outcome can be negotiated if you turn it in because then they don't have to pay for repo.

Once he knows what will happen, then he can start deciding what the best course of action is.

Awesome advice here.

Thats a bummer though... going to trash his credit score if he has to turn them back in, even if it was voluntary...
- X

[rodscamaro]

Originally Posted by nova

First thing he needs to do is get out of the realm of "I think" and get into the realm of "I know."

Go up to or call the CU and just ask them. "I'm having financial trouble, what would happen if I turn in the vehicle to you and the auction doesn't cover the loan balance." Sometimes that outcome can be negotiated if you turn it in because then they don't have to pay for repo.

Once he knows what will happen, then he can start deciding what the best course of action is.

He did say he talked to them and they said if they don't have to repo them, it will save him money. Never the less, they said after auction he may have to pay the difference. Now he's 10,000 upside down on both vehicles and he just got them to allow 1 month without a payment but he's in serious trouble. His wife is on the cars as well and she's still in the military and has good credit.

[Skyblu]

Well I'm a loan officer but not for cars but here's my take, if at all possible try to sell the harley outright because they hold their value if taken good care of and he can possibly get most of his money to pay that loan off without taking too bad of a hit. I would then consider depending on what type of car he has trading it in on a smaller more economical car for a lower payment, even if he is "upside down" maybe he could afford a lower payment if he downgrades the type of vehicle he has. If at all else fails I know we give deferments on our loans for people who are in the service to buy more time to pay. If none of these things work then at least take them back to the lender and wait and see what your bottom line is to have to repay after the auctions, then attempt to work out a reasonable amount to pay each month and be on time with your payment as this will help with your credit repair. I hate to say it but if they are only willing to give him a month at this point he must really be past due already and should have addressed this sooner, unfortunately I see that all the time people hope it will all go away like a bad dream. What they don't realize is that waiting is the worst mistake they can make! Tell your friend good luck hope this helps.

[Lordkane99]

I had a bad time a few years ago and the bank allowed me to pay the interest (about half my payment) each month with no penilty on my credit. I was on unemployment for 4 months, got a job and was able to finish paying the vehicle off. Just an Idea, might work until he can find a buyer.

[nova]

First I'd recommend finding a financial counselor of some sort because upside down to the tune of $10k makes me think he was living beyond his means.

Second he may have to pay the difference? Sounds to me like there's wiggle room to negotiate.

That may involve a short sale of the vehicles coupled with an unsecured personal loan for the remainder if that gets him into a payment he can afford.

It may involve the CU realizing they're never going to get the remainder and writing off the loss to save money and hassle in legal proceedings.

If he can't either

A. Sell the vehicles for the full balance and pay off the loans or

B. Short sale the vehicles and get the CU to write a personal loan for the balance that he can then afford and keep current

then it IS going to hurt their credit, its just a matter of how much. The trick is going to involve working out the "least bad" option with the CU.

[2ndgenz28]

They do this in the housing market and its call a short sale.

And only works if all parties involved agree to take less.

It can take many months to get it done for a house.

But if not done right, yes they can come back later n say, pay up sucker.......

Unless he has paper that say so first, lock the stuff in a storage shed so it can’t be repoed and sold at auction, to have them come back later for the difference. [repo men cannot break in to repo something.]

You then also have leverage to get them to agree to a short sale.

Sounds dirty but they can’t repo a house without months of paper work, where a car or bike they can repo without months of paperwork.

If you don’t have leverage over them, your at their mercy.

Worrying about a credit rating in todays times is useless, folks defaulting on $300,000 homes every 30 sec in this country still have good credit as we are all now judged on a big curve.

[rodscamaro]

Good advice, I personally think the bank wont come after him but It's up to the bank. He's going to read this tonight, so keep it coming, Thanks!!!

[rodscamaro]

TTT