What do you do when you get behind on your car payment and the auto finance company keeps calling you? First and foremost try to make payment arrangements, in todays economy finance company's want to keep your business despite your poor performance as long as you're willing to pay something towards loan.
However, in cases where you have no intentions of repaying the loan and you're willing to part with the car because the car salesman who sold it to you swindled you into a car loan that has you upside down (meaning the loan is more than what the car is worth). If this is the case than you need to call the auto finance company and tell them to come get the car. Once they have the car in there posession you must address the loan balance. Normally a portion of what the car sells for at auction will be applied toward the balance owing. Often this contribution still leaves a huge balance after the bank assesses late fees, penalties and wear and tear to the vehicle.
So what to do with the rest of the balance? Here is the answer straight and simple, word for word - settle the debt. Best case scenario they will allow you to settle for 25% to 30% of the balance and then the remaining balance they will write off and 1099 you at the end of the year as if though they gave you a credit on the loan. Talk to your representative at the bank and they will go more into detail regarding how this is done on their side. Keep in mind, this 65% to 75% discount will not come easy, there will be some posturing on both sides to negotiate this debt. But in the end you will come out ahead if you apply some of the basic negotiating theory we discussed in our second video and blog entitled, "negotiating theory". So I wish you well and we hope to see you back on the right track with your credit soon. If you have any questions or need any additional information please feel free to post your questions in the comment section and we will get you the answer you deserve.