Modern vehicles are so expensive that most people cannot afford to purchase one without financing. Car loans allow employed individuals of all income levels to afford reliable transportation with a reasonable down payment and monthly payments on the vehicle. There will typically also be special insurance requirements for the owner.
However, the risk when purchasing a financed vehicle is that the transportation someone relies on also serves as the collateral for their financing. If someone falls behind on payments, their lender could potentially try to repossess the vehicle as a means of recovering what the company invested in the vehicle’s purchase. Repossession often leads to the resale of the vehicle and can cause hardship for the vehicle’s owner in two distinct ways under these circumstances.
They lose what they invested in the vehicle
A vehicle is an asset worth thousands, in most cases. Repossession frequently means that someone loses all of the equity that they should have accrued by making monthly payments on the vehicle and committing a down payment toward its purchase initially. They won’t have the vehicle itself to serve as a trade-in when they try to purchase a vehicle again, which will only compound their difficulty in affording transportation in the future. In some cases, where the vehicle has depreciated substantially, they may even still owe money to the lender after the repossession and resale of the vehicle.
They face hardship without transportation
People who lose their vehicles sometimes also lose their jobs. Certain kinds of work depend on an individual being able to drive to perform job functions. Even if someone spends their entire shift on the factory floor, at a retail shop or in an office, they will still require independent transportation to reliably get to work on time every day. Neither public transit nor carpools give someone total control over when they arrive at work. Using alternative transportation systems, like rideshare services, can often prove cost prohibitive for those already struggling to cover all of their financial obligations each month.
In some cases, a timely bankruptcy filing can help an individual avoid vehicle repossession and the financial hardship that would result. Having a realistic idea of what repossession can mean for a vehicle owner can help someone take the steps necessary to more effectively protect themselves. Seeking legal guidance can provide this clarity.
