Not a lawyer or a financial advisor, but generally speaking, if your car is repossessed, you are typically still responsible for the remaining balance on the loan after the lender sells the vehicle. The process usually works as follows:
- Repossession: The lender takes back the vehicle, usually because you’ve defaulted on the loan by failing to make required payments.
- Sale: The lender then sells the repossessed vehicle, often at auction.
- Deficiency: If the sale price is less than the remaining balance on the loan, the difference is known as a “deficiency balance.” You’re generally responsible for this amount.
- Additional Costs: You may also be responsible for any fees related to the repossession process, such as storage and auction fees.
- Collection: If there is a deficiency balance, the lender may attempt to collect this amount from you. This could include legal action and may negatively impact your credit score.
- Judgment: If the lender takes legal action to recover the deficiency and wins, a court judgment could be issued against you. This could potentially lead to wage garnishment or bank account levies, depending on the jurisdiction.
- Rights and Protections: Laws on repossession and deficiency balances vary by jurisdiction. Some states have “right to cure” or “right to redeem” laws that allow you to get your car back if you pay the past-due amount and associated fees before it’s sold.
- Legal Counsel: If you find yourself in this situation, it would be prudent to consult with a lawyer who specializes in consumer finance or repossession issues to discuss your rights and options.
Note: This information is meant to provide a general overview and should not replace professional legal advice. Always consult with a qualified attorney for advice tailored to your specific situation.
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