Auto Repossession and Your Credit Rating
An auto repossession and your credit rating and two things that are linked. Here we look at how an auto repossession can affect you, what you should expect when it occurs and what you can do to fix it.
Firstly we will briefly look at how an auto repossession can come about. In a typical scenario a customer will miss their due date for the payment of their loan on their vehicle. As with almost any type of credit product, the credit provider will likely send out a letter warning them of the late payment, which will then be followed up with a telephone call.
If the payment is still not made within a designated grace period, the repossession can then legally occur. Contrary to popular belief, repossession can occur after just one missed payment there does not have to be two, three or more missed payments for it to occur.
If this happens to you, an auto repossession will stay on your credit report for a period of at least seven years, and can be up to ten years depending on the state that you live in. This will have a hugely damaging affect on your credit report and will severely hinder your chances of being accepted for any type of credit during this period.
If you are struggling with your finances and believe that a repossession is about to occur on your vehicle, the first step is always to talk to your lender. If you explain your circumstances it may be possible to prevent the auto repossession, and your credit rating will not necessarily be affected. The lender will often be happy to work with you as long as you keep them in the loop.
If the repossession does occur, you will not only be required to pay the repo fees , but also towing charges, storage fees and any other costs that can be attributed to the event. This can easily total several hundred dollars, but if you are able to pay this you will at least be able to salvage your car and your credit report.
When it comes to auto repossession and your credit rating, it is strongly advised that you are aware of what is likely to happen. Having a vehicle repossessed will mean not only that you lose the vehicle, but also that you will struggle to be approved for credit products for some time to come.
For more about how to remove a repo and other negative information and fix your credit or for info about how credit lawyers can help with this process.