Consumers have the responsibility to look out for their own best interests and not depend on someone, or some business, to do it for them. This goes with any transaction, especially a car that one has fallen behind on.
When a person can no longer afford the vehicle she is driving; it is not uncommon that the car has sunken in value to an amount that is lower than the loan balance. This is common for any vehicle purchased with a loan that is greater than 42 months.
During such an event where repossession appears to be imminent, some will opt to forfeit the car to the lender to avoid any trouble. What would be better would be to sell the vehicle, and then pay off the difference. But this process involves more than just selling the car.
How to Execute a Private car Sale for a Vehicle with a Note
Selling a car privately involves a transfer of title. To do this, the lender must be paid off, or be informed that a sale is going to take place where the loan will be satisfied, but to satisfy the loan, the car has to be paid in full, which is not often possible through the sale alone.
To make up the difference, cash must be used. For those who do not have it, they must borrow money from a loved one or another lender. Believe it or not, this method saves more than not handling this before repossession.
Voluntary Auto Repossession Will Guarantee Collections
The reason that selling a car privately and then dealing with the difference is easier is that the dealer is going to get his money one way or another. So, if they sell it for $3,000 less, they do not mind because the previous owner (you) is on the hook for the difference between what is owed and what the car sold for. The car could sell for less for any number of reasons that could include cigarette burns in the seats, scratches on the dashboard, stains that won’t come out of the carpet, or a lot of mileage.
After the sale is executed, the dealership will likely assume that the client is not going to honor the loan, and rather than deal with him or her, the easier route would be to give it to their collections department. Either way, the money is going to be collected, but selling the car and taking responsibility will result in less damage to your credit, or even improving it if no payments were missed, because the loan will have been satisfied.