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How to stop a car repo

Published On: Nov 06 2013 10:13:45 AM CST
Updated On: Nov 06 2013 12:11:57 PM CST
Line of Chevrolet cars

Carlos Barria/Reuters

By Craig Streaman, Special to THELAW.TV

Nobody walks onto a car lot with the intention of purchasing a car only to have it repossessed. Things happen; consumers fall into unforeseen financial hardship and simply don't have the funds to cover their monthly expense of a vehicle. The loss of a job or unexpected medical expense can quickly make it impossible for the owner of a new or used vehicle to keep up with payments. After falling behind, the dealership and finance company can repossess the car and, barring a procedural violations, they have every legal right to. Unfortunately, it often isn't so simple.

Many cars that are repossessed have serious issues, are underperforming, or are completely undriveable. Used car salesmen often live up to the stereotype of committing fraud against their customers, leaving them with a car that isn't worth nearly as much as they paid for it. It's difficult to justify making a large payment month-after-month for a vehicle that is constantly requiring expensive repairs that the dealership refuses to pay for. Why would someone keep paying for a car that's constantly in the shop and isn't what they bargained for?

One reason to keep paying is to have leverage. If the buyer still has possession of the car, and can keep it from being repossessed, they may have a strong Auto Fraud Case against the dealership. By suing the dealer and finance company, they may be able to get back their down payment and any other moneys they invested into the car. But this typically only works when they can exchange the vehicle for the refund. Regardless of whether someone falls behind on payments because they lost their job or are mad because they got scammed by the salesman, the dealership can still repo the car. There are some important tips on how to stop a car from being repossessed that may help you or someone you know in the future.

Keep in touch with the finance company

When a buyer signs a sales contract with a dealership, and subsequently gets financing, the finance company is equally liable for the terms of the contract. Simply falling behind on payments and crossing your fingers that your car won't disappear is not the right approach when trying to stop your car from being repo'd.

Often times, the finance company can work with the owner of the vehicle to get their payment reduced for a period of time in order to get caught up on the car loan. Consumers who call to let them know when to expect payment, and how much they can expect, are much less likely to have their car repossessed. Just as with credit card companies, car loan finance companies have the ability to work with their debtors when it comes to the repayment schedule.

What if there's auto fraud?

In the event that the vehicle was misrepresented by the dealer, and the consumer has a legal case against the dealer, communicating with the finance company becomes even more important. If the dealer refuses to make repairs according to the warranty, or did not disclose important information about the vehicle's history (frame damage, prior accidents, etc.), the car owner can sue both the dealership and the finance company equally, since they are both liable. By communicating the situation to the finance company, they are likely to put pressure on the dealership to make good on their deal to avoid the lawsuit.

Once again, the consumer has a much stronger case if they still have possession of the car, since they can use it as bait to get their money back. In the end, making the effort to stay current, even if it means borrowing money from friends or family, may be the best course of action for the majority of car owners with monthly payments.

The author, Craig Streaman, works at Consumer Action Law Group, PC, a Los Angeles, Calif., bankruptcy and foreclosure law firm .

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