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Captiol ONE Repossession


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Has anyone had any experience with a vehicle repossessed by Capital One? Do they let you pay deficiency balance in installments? Will they try to garnish my check or put a lien on my house? I estimate that I have $9,000 negative equity.

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They won't want to accept payments but in the end, most will do so because it's in their best interests to accept payments from someone willing to pay.

You may be in for a shock about the balance you owe, however. Aside from all the special fees associated with a repo, repoed cars sold at auction usually go for a WHOLE lot less than wholesale.

I know it's too late now but it is always better to avoid a reop...once it's repoed, you've lost all control of the process. Also, other than a bankruptcy, a repo is the worst "hit" your credit history can take.

It's always better to sell the car yourself (you'll always get more money for it that way) and try to work out a deal with the lender to accept payments for the difference. It's not always possible to get a lender to agree of course, but if you can find someone with a brain, they'll see the advantages to them to do it that way.

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They won't want to accept payments but in the end, most will do so because it's in their best interests to accept payments from someone willing to pay.

You may be in for a shock about the balance you owe, however. Aside from all the special fees associated with a repo, repoed cars sold at auction usually go for a WHOLE lot less than wholesale.

I know it's too late now but it is always better to avoid a reop...once it's repoed, you've lost all control of the process. Also, other than a bankruptcy, a repo is the worst "hit" your credit history can take.

It's always better to sell the car yourself (you'll always get more money for it that way) and try to work out a deal with the lender to accept payments for the difference. It's not always possible to get a lender to agree of course, but if you can find someone with a brain, they'll see the advantages to them to do it that way.

I don't understand how I can sell the car myself if I don't have the title. Because if I sell the car, the new buyer will need the title but I still owe money on the car for the balance. I think my trade in value is $16,000 so I am $9,000 negative with the loan of $25,000. But you are saying that I will get less than the $16,000 for wholesale price if they sell it?

My other option is to try to trade the car in to save my credit. The car is a Ford that burns too much gas and has been in an accident and repaired but not the same since. I want to get out of it for a more depandable car like a Honda. (Yeah, I know I should have known better than to buy a car that depreciates and tack on negative equity.) The only way I could do that is to borrow money from my 401K to come up with enough downpayment to cover half of negative equity. At least I would have a car that holds value and is better on gas.

But I don't think it is worth tying up money from my 401K to do this. Letting the car go and take a hit seems easier. At least I would have smaller payments to repay the company. What do you think?

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If you still have possesion of the vehicle, you can do something about it.

Locate a dealership that is willing to apply the difference to the contract of a newer, less expensive car. What happens is they appraise your car at the $16,000. The payoff is $25,000, they will apply the difference to your contract to pay off along with your current vehicle. Even if the Crap1 TL is reported as late, do not hesitate as many dealerships have lenders just wating for this.

Do note that the advantages are you will be able to get up to 45 days before making first payment of the newer vehicle, which can help you get your affiars back in order to begin the new "adventure". Also, with a lesser amount of vehicle, the payments will be lower, plus, if availalbe, do take the 72 month contract over a 60. Remember, you may not keep the vehicle that long and be able to bail with very little loss later on. I say this as you can always send extra funds each month to apply to principal.

Lastly, I would advise you sit down and add up your liabilites, minus current car payment. Then, decide exactly what the minimum is you need each month to survive, and use the balance to determine what you can afford each month for a newer vehicle. Yes, you may have to settle for a used, but, so what. Your main goal is to avoid the repo, period. You can always upgrade in a year once things settle down.

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If you still have possesion of the vehicle, you can do something about it.

Locate a dealership that is willing to apply the difference to the contract of a newer, less expensive car. What happens is they appraise your car at the $16,000. The payoff is $25,000, they will apply the difference to your contract to pay off along with your current vehicle. Even if the Crap1 TL is reported as late, do not hesitate as many dealerships have lenders just wating for this.

QUOTE]

Are you saying that I need to find a dealer that can finance a loan up to 145% or 150% of MSRP? So, if I found a car that was $18,000 that means that I can add $9000 negative to it? But then my payments would probably still be the same. Because I would have a $27K loan. How is that lowering payment? Excuse me if I misinterpreted something along the way. I do want to save my credit if possible though that's the main thing.

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I don't understand how I can sell the car myself if I don't have the title. Because if I sell the car, the new buyer will need the title but I still owe money on the car for the balance. I think my trade in value is $16,000 so I am $9,000 negative with the loan of $25,000. But you are saying that I will get less than the $16,000 for wholesale price if they sell it?

Here is an example:

If the car is worth $16K wholesale, and

You owe $25K,

You can probably get $18 to $20K for it in a private party sale which means you have a deficit of $5-$7K to cover.

You have three options at this point…

If you have the $5-$7K you simply take that along with the money you got from the sale and pay off the note and transfer title; every state/county has a way to make this happen; it's just that a dealer takes care of this part if we trade-in a vehicle on another one.

If you don’t have enough to cover it then you can do one of two things…

You can see if your current lender will let you sign a promissory note for the difference and then you pay it off in payments…some lenders will do this because overall, it's a much better position for them.

If the current lien holder won't do it then sometimes a local bank or credit union will; especially if you explain what you are trying to accomplish. If this is your only vehicle and you need a car then you need to find a way to gather up a thousand or two (you can ask for a couple of thousand more from the bank/CU) and use that to pay cash for a car to get you by or pay cash with whatever you can scrape up.

Whatever you do, don't buy a new car or any car that you can't pay cash for. If you just made that one change in yoru financial life it woudl be worth more to you than you can imagine. Here is why; the average car payment in the US is around $350/month. If you take that amount and save it each month in an average mutual fund, it will be worth over $354,000 in 20 years; over $4.1 Million in forty years. With a little patience, you can save up and pay cash for just about any two or three year old car you want and let someone else take the hit for depreciation.

My other option is to try to trade the car in to save my credit. The car is a Ford that burns too much gas and has been in an accident and repaired but not the same since. I want to get out of it for a more depandable car like a Honda. (Yeah, I know I should have known better than to buy a car that depreciates and tack on negative equity.) The only way I could do that is to borrow money from my 401K to come up with enough downpayment to cover half of negative equity. At least I would have a car that holds value and is better on gas.

But I don't think it is worth tying up money from my 401K to do this. Letting the car go and take a hit seems easier. At least I would have smaller payments to repay the company. What do you think?

Never unplug a 401(K) unless it's to prevent a bankruptcy.

I'm not suggesting you go into new debt/more debt; exactly the opposite. I’m not trying to offend here but you obviously can’t afford payments or you wouldn’t be facing a repo in the first place. And ALL cars depreciate - most loose 60% of their value in the first four years. It NEVER makes financial sense to buy a brand new car; there is no “interest rate” deal or rebate that will ever offset the tremendous loss in value you’ll experience. There also isn’t any MPG or “lack of repair” cost that justifies buying a new car either and I say that as someone who works for a major auto manufacturer.

I put my money in things that go UP in value and I recommend the same for everyone else.

If the car is already gone then it’s probably too late but the reason I said never let a car be repoed is because if you can sell the car in a private transaction for $18-$20K; the lender will probably not get more than $12-$14K at auction.

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Here is an example:

If the car is worth $16K wholesale, and

You owe $25K,

You can probably get $18 to $20K for it in a private party sale which means you have a deficit of $5-$7K to cover.

You have three options at this point…

If you have the $5-$7K you simply take that along with the money you got from the sale and pay off the note and transfer title; every state/county has a way to make this happen; it's just that a dealer takes care of this part if we trade-in a vehicle on another one.

If you don’t have enough to cover it then you can do one of two things…

You can see if your current lender will let you sign a promissory note for the difference and then you pay it off in payments…some lenders will do this because overall, it's a much better position for them.

If the current lien holder won't do it then sometimes a local bank or credit union will; especially if you explain what you are trying to accomplish. If this is your only vehicle and you need a car then you need to find a way to gather up a thousand or two (you can ask for a couple of thousand more from the bank/CU) and use that to pay cash for a car to get you by or pay cash with whatever you can scrape up.

Whatever you do, don't buy a new car or any car that you can't pay cash for. If you just made that one change in yoru financial life it woudl be worth more to you than you can imagine. Here is why; the average car payment in the US is around $350/month. If you take that amount and save it each month in an average mutual fund, it will be worth over $354,000 in 20 years; over $4.1 Million in forty years. With a little patience, you can save up and pay cash for just about any two or three year old car you want and let someone else take the hit for depreciation.

Never unplug a 401(K) unless it's to prevent a bankruptcy.

I'm not suggesting you go into new debt/more debt; exactly the opposite. I’m not trying to offend here but you obviously can’t afford payments or you wouldn’t be facing a repo in the first place. And ALL cars depreciate - most loose 60% of their value in the first four years. It NEVER makes financial sense to buy a brand new car; there is no “interest rate” deal or rebate that will ever offset the tremendous loss in value you’ll experience. There also isn’t any MPG or “lack of repair” cost that justifies buying a new car either and I say that as someone who works for a major auto manufacturer.

I put my money in things that go UP in value and I recommend the same for everyone else.

If the car is already gone then it’s probably too late but the reason I said never let a car be repoed is because if you can sell the car in a private transaction for $18-$20K; the lender will probably not get more than $12-$14K at auction.

Won't this promissory note show up on my credit report as I still did not meet my obligations?

My sister said I could use one of her old cars until I get back on my feet if the car is repoed. So, that would be helpful to me.

I agree with everything you said here about the high carpayment. I have often thought of other things I could be doing with the money. I have wasted money and I realize that, but sometimes you need to hear it from other people who are more objective. So thank you. Your insight has been very helpful. I will see how I can apply it to my situation to get straightened out.

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It's hard to say how your lender might report this to the bureaus or even if they will report it.

However, I would say that as long as you keep up with whatever you and then agreed upon it shouldn't "hurt" anything...after all, you already owe the money...we aren't taking on new debt; just restructuring what you already have. I would suspect that if they show anything, they'll show the old debt as being paid in full and the balance probably be reported as a new debt for the balance owed.

Anyway, whatever they report could never hurt your credit as much as a repo would.

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What Robert is saying is good stuff. My comments are based on IF you do want to get another vehicle so as to not be "afoot". And, yes, there are dealerships who have lenders who will loan more than the new vehicle's price. Remember, dealerships know how to "write" deals. Also, I say this mainly if your current situation was due to something beyond your control that happened, such as a medical problem, or job loss, and is totally temporary. Otherwise, following Robert's advice would be best.

Now, since you mentioned your sister would loan you a car, then, most definitely, let it go. Just remember, as Robert pointed out, you would be liable for any difference between payoff of contract and actual amount sold for at auction. Then, if this occurs, you will have to look at your state's laws regarding repo's to make sure they are followed, as a way to offset this amount if they erred. Yes, it does happen, but, not too often. An example, in some states, is that they must notify you in writing within so many days or they lose their right to collect the difference. You would have to read them.

As to attempting a refi on the loan, you can do this as many lenders are out there who will. But, do realize that most of them want a minimum of one year seasoning on the original loan, sometimes more. But, I would ask myself if this is the best for the whole matter. In short, would a refi be just a temporary bandaid, or a total fix.

Lastly, in support of Robert, do not touch your 401 unless you have to file BK. I had one I cashed in when I had my Heart Attack in '97 thinking I can just get it back up there soon as I can raise my contribution from 5% to 8%. WRONG!! I was never able to get back to where I was, so when I retired, there was very little to enjoy as compared to original. It isn't worth it, trust us. This includes taking only a portion, if allowed for emergencies.

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Nashville and Retmar . . . hats off to both of you. Thank you for taking the time to write such detailed messages. I am going to print this thread out and study it to work out my strategy plan. Right now I am thinking to go the repo route and pay the difference.

One last question: Is it best just to skip one payment and then tell them to come pick up the car? Or should I not do a voluntary repo? I don't want to hide the car like some people do who are late on payments, I just want them to come get it. Even though I have had not had any late payments, I have been living paycheck-to-paycheck keepng up with the payment and insurance.

I will check back in with the board to give an update on how things are going next month. Thanks again for sharing your knowledge to help other people who are stuck in these unfortunate financial situations.

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If your question is solely for putting off the inevitable, the answer is no. Do not play games as most often they come back to bite you. Do realize, that in the past, a voluntary repo looked better than a plain repo, but, according to many it does not matter anymore.

Myself, if you are now current, call them and tell them that you are unable to continue and they can pick the car up at their convenience as you do not want to cause any further problems. Now, I do have to say this. IF, by chance, there is daylight in a little over a month, you can also ask your lender if you can "skip" a payment. What happens here is many lenders allow for at least one "skip" per contract. A processing fee does apply at usually $20. Then, the next month your statement will reflect your current amount due PLUS the interest missed. The principal is applied to the end of the contract, or, you can pay it off by sending extra money each month to offset this balance.

Lastly, do not make your move until you have all issues covered, such as transportation. You can even offer to bring the car to them as a gesture, then, sit down with the credit manager and flat out explain your situation. Mind you, it will not change anything, but, you never know what they may say as in wanting to assist you. I say this as they do not want the car back just like you don't want to give it to them. In short, cover all angles available to better prepare you for the next step in this matter. In short, by talking to this person, you can possibly get a head's up on what will happen.

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I really encourage you to not let the car be repossessed if there is any way possible to avoit it (for the reasons cited above).

If you feel repo is the only route for you then you can either call them and tell them to come pick it up, drop it off at a location they tell you or just let them come and get it when they are ready. I definetly wouldn't try to hide the car or play games with them.

From a "damage" prespective, there really isn't any difference between a voluntary repossession compared to an involuntary one so I guess I'd say that if you are going to take that kind of damage to your credit you might as well get as much use out of the vehicle as you can before they come to get it.

Most lenders won't pull the trigger until you are three months late (of course, that totally depends on the lender); technically they can come get the asset on the first day you are late.

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Thanks again for your input. I am planning to call them to get the car or make arrangements to drop it off after I receive the first late notice. I am just tired of being stressed and living paycheck-to-paycheck with this high car payment and insurance.

I don't want to file bankruptcy because there are other creditors that I want to keep my obligation to. I realize that a repo is just as bad as a bankruptcy, but I will just have to take the hit for repo and pay the deficiency. Because I brought this on myself.

I really appreciate your counsel on this matter.

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first off if you haven't had any late payments yet you are still quite a ways away from a repo usually most lenders don't start looking for a car til at least a cople of payments have been missed, also many lenders will free of charge grant a thirty or sixty day extensionto your loan, they basically let you skip a payment or two and add them on to the backside of the loan, this is usually for emergencies but you could use the time to get the car ready for sale, and get it sold for as much as possible, take control of this situation now and get the car ready to sell

get crap one to let you miss a payment or two(with good history they'll do it)

find out what the book value is

clean it up real good

sell it and replace it with your family loaner till

you can pay cash for a reliable used car

even thinking about a repo with no lates yet isn't rational thinking

good luck

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first off if you haven't had any late payments yet you are still quite a ways away from a repo usually most lenders don't start looking for a car til at least a cople of payments have been missed, also many lenders will free of charge grant a thirty or sixty day extensionto your loan, they basically let you skip a payment or two and add them on to the backside of the loan, this is usually for emergencies but you could use the time to get the car ready for sale, and get it sold for as much as possible, take control of this situation now and get the car ready to sell

get crap one to let you miss a payment or two(with good history they'll do it)

find out what the book value is

clean it up real good

sell it and replace it with your family loaner till

you can pay cash for a reliable used car

even thinking about a repo with no lates yet isn't rational thinking

good luck

I have only paid on the car for four months. No late payments. This was a very bad financial mistake that I made because of negative equity from other cars. I have very little money left for grocercies and gas after I pay mortgage and current bills along with the high car payment and insurance. That's why I want to get off this runaway train now while I can. I would rather work out payment plan for the deficiency balance than pay the high car payment and insurance.

So, you are saying they might refuse voluntary repo because I have not been late?

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One thing I was told and have seen proof of is that typically they will not repo until you are 3 months late on your payment. The main thing would be keeping in regular contact with them to-if you still have the car I would either sell it ASAP (can someone assume the loan? or maybe buy it outright?) or voluntarily turn it in. JMHO, not saying I'm right but I've had a car repo'd and found out a little too late about that 3 mon cut off date.

Good luck and I'm sorry you're going through this.

Elyse

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One thing I was told and have seen proof of is that typically they will not repo until you are 3 months late on your payment. The main thing would be keeping in regular contact with them to-if you still have the car I would either sell it ASAP (can someone assume the loan? or maybe buy it outright?) or voluntarily turn it in. JMHO, not saying I'm right but I've had a car repo'd and found out a little too late about that 3 mon cut off date.

Good luck and I'm sorry you're going through this.

Elyse

Unfortunately, the car is $10,000 negative even if I sell it to a private party. I don't have 10K laying around. Also, It is still $10-11K negative I let it be repoed. So, either way I am stuck.

If I call them to come pick it up, will they pick up the car right away. I don't want the car sitting around in my yard for 3 months.

Thanks.

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After reading from my first repsonse, I noticed some others have jumped in and made some honest and interesting comments I would like to add my penny's worth.

It is true that most auto lenders do not repo until at least the third late, I would not allow that to happen, no matter what the reason. Just to put off what is going to happen anyway, makes no sense. Here is why. When you figure in how the scores work, I can only assume that along with a repo, your score will take dings for the lates, also. So, as you noted yourself as to no lates at this time, in my opinion, it would be best to volunteer the car to them now, which means it is gone and out of your "business", as well as allowing you to use the saved payment money to apply to another important matter, whether food or utilities. Then, you will be able to plan for the upcoming deficiency payments you will have to make. In other words, you will have maybe three months before having to start paying this debt off. Alot can happen in three months.

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At the risk of beating a dead horse, I urge you one more time not to let this become repossession. If you think you are $10K upside down that could easily turn into $15-$20K by the time they are done selling the car for less than wholesale and all the added fees. They will almost certainly come after you and you may well wind up in bankruptcy whether you want it or not.

I agree you need to get off the runaway train but rather than jump off while it’s a full speed (a.k.a. a repo), why not slow it down to a crawl so that you can step off and not kill your credit in the process.

If you haven’t even had a late payment yet then you have some time to try and retail the car yourself…talk with the lender…see what they might be willing to do to help you (and don’t stop with a cubedweller…get to a supervisor/manager/executive level so that you’ll be talking to someone with a brain.

You are feeling helpless and hopeless…I’ve been there…most on this board have at one time or another. But you have to go beyond that and apply some logic.

If you had thought it through logically, you would have never bought this car in the first place…don’t make a similar mistake in getting out of the first one.

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