BAD CREDIT – REPO – INSURANCE LAPSE - ACCIDENT
Everybody’s Uncle,
I just stumbled upon your website while looking up the potential ramifications of allowing a car to be repossessed. Here is my situation; perhaps you can provide some insight.
I have horrible credit. Two years ago I received a high interest auto loan. Anxious to get out of my beat up Honda Civic I accepted the loan by purchasing a 2001 Dodge Durango. I regretted my decision almost instantly. I have had trouble making the $508 payment every month. Not to mention gas is sky high right now and gas for the vehicle costs over $200 a month in and of itself. The car was repossessed in June and I managed to get it out because I was advised by a friend in the auto sales business that the damage it would do to my credit was tremendous (and I'm thinking, how can it get any worse).
The most recent event, complicating things further, is that I was involved in an accident in the vehicle. Irresponsibly, I had let my insurance lapse. Although the accident was fairly minor it has done major mechanical damage to the vehicle. The costs of repairing the body and the mechanical damage will probably exceed $5,000. A friend suggested I let them repo the car and use any money I have to buy a different vehicle. This person believes that the car will never run the same again. I have read the advice you provided to others regarding repossession, i.e., don't allow repossession because the payments / fees which result are tremendous, try getting a second job and cutting expenses, etc. By the time I am finished paying off the vehicle I will have essentially paid the same amount as a brand new BMW would cost. It's not worth it.
Please advise.
Also, I would welcome any advice you may have to offer regarding fixing bad credit.
Sincerely,
Rita M. Bailey,
Rita,
You use the word “Irresponsibly,” referring to your financial history that includes, bad credit, a high interest loan that took you from an economical car to a gas thirsty SUV with an unaffordable payment that led to repossession, then recovery, followed by insurance lapse, and a $5000 uninsured accident. Now you have an “expert” friend apparently suggesting that the vehicle will never be the same, therefore, repossession now makes sense. Did the “expert” tell you that new car purchase after repossession comes at a discount? Does the “expert” know of insurance companies that offer low rates to defaulters?
You ask, “How can it get any worse?”
The lender gets a judgment against you that includes all kinds of nasty charges, (repo, repair, legal fees, etc.). “He” then can demand (or seize) funds from bank accounts or request garnishment of your pay. That’s how! (Check with a lawyer.)
All of which brings you to this posture.
“By the time I am finished paying off the vehicle I will have essentially paid the same amount as a brand new BMW would cost. It's not worth it.”
WHAT is not worth it, facing reality vs. depending upon the fairy godmother of finance to wave her magic wand?
Luckily, your uncle still loves you.
Are you ready to change “Irresponsibly,” to responsibly? If not, read no further. That is the root cause that can not be fixed with band aids.
Do you understand REPOSSESSION SOLVES NOTHING?
Whether you have to pay off a BMW or a Rolls makes no difference, the debt exists and will not simply go away. [If the “expert” can show otherwise, Uncle Jimmy is willing to learn.]
Common sense (free) and credit counseling (fee) can help.
First, to whatever degree possible, address your bad credit. You can negotiate lower interest rates, a bearable repayment plan, and perhaps some debt relief.
Repairing the vehicle is really not an option. Either you fix it and hope for the best (a $5000 repair is not necessarily a car crippling event), or have it repossessed by an unhappy dealer who will fix it, and then, you can expect the worst.
No magic wands, just bitter pills.
Everybody’s Uncle
