WALLINGFORD, CT October 10, 2009
/24-7PressRelease/ -- Connecticut Better Business Bureau warns troubled car owners to do everything in their power to prevent repossession of their vehicles. Default on car loan payments are not only inconvenient, but can also have a severe impact on credit scores and limitation of subsequent attempts to secure loans and credit cards for as many as seven years.
According to American Bankers Association reports, the number of repossessed vehicles jumped 12 percent to 1.67 million in 2008, and Manheim Consulting, a wholesale vehicle auction operation, expects that number to increase by another 5 percent in 2009.
Connecticut Better Business Bureau President, Paulette Scarpetti, advises consumers with difficulties making their payments to avoid hiding from their loan holders.
"Consumers should face the problem head-on and try to come to an agreement with a lender to avoid defaulting, repossession and the negative effect on personal credit scores."
If a lender chooses to sell the car at auction, and it is bought for less than the outstanding loan, the original owner may still be on the hook for the difference between what is owed on the car and the amount the lender gets for the vehicle at auction, as well as added fees,—essentially paying for a car they no longer own.
Connecticut Better Business Bureau recommends car owners consider the following advice when they fall behind on car payments:
Contact the lender:
Auto repossessions cost creditors about $8000 so there is a mutual interest in avoiding repossession.
Lenders often will work with troubled borrowers to develop lower car loan payments. Possible options include loan refinancing, extending or deferring payments, waiving fees and changing payment due dates.
Choose a less expensive vehicle:
If you see that you are about to run into difficulties making car loan payments, pay off the loan if you can by selling the vehicle and consider selecting a less expensive vehicle with monthly payments that are within your means.
Do your research before enlisting any debt management help:
Some companies offer help with debt management and possession prevention, however be extremely wary of offers and sales pitches that require payment of upfront fees, and always research the organization with BBB before you do business with them.
Consider seeking the help of a credit counseling agency, as they offer inexpensive and sometimes free guidance on how to manage money. You can find one through the National Foundation for Credit Counseling, the nation's largest and longest-serving nonprofit credit counseling network, at http://www.nfcc.org.
You can find more advice on managing personal finances and debt at http://www.bbb.org
About Better Business Bureau CT
Founded in 1912, BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. BBB offers objective advice and a wide range of education on topics affecting marketplace trust. BBB also offers complaint and dispute resolution support for consumers and businesses. Today, 128 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than three million local and national businesses and charities. For more advice on finding companies and businesses, start your search with trust at http://www.bbb.org
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