Car finance and repossession

What Happens When Things Go Wrong?

Things can go wrong in life; that’s just a plain fact. If something goes wrong with your car finance arrangement, it’s essential to know that repossessing your car is the last resort for the finance company.

The Finance Company's Perspective

At the same time, we have to be honest. In our experience, they are not reluctant to make this move as soon as they can after they have pursued other avenues. That’s why you should do your best to speak to the car finance company (in writing) and reach an agreement if you want to keep the vehicle.

Prioritising Your Debts

If you are in arrears with your car finance payments, try to work out a way to catch up with your payments by clearing the arrears. Many people prioritise the wrong debts, meaning repossession occurs when it doesn’t need to. For example, unsecured debts like credit cards or personal loans are considered lower priority than secured debts like car finance. So, you should always prioritise the car finance debt ahead of the unsecured debt, as there are no assets attached to the unsecured debt.

Using a Budget Planner

We have a separate section that covers handling unsecured debt payment issues. Go through our budget planner to see if you can free up some cash to help clear the arrears. Do not reduce essential outgoings like food to pay the arrears, as your well-being takes priority over any debt.

If this approach does not solve the situation or your car has been repossessed, don’t worry; we’ve got you covered.

Let’s take it step by step below...

Understanding the Shortfall

If you fall into financial difficulty, agreeing on a payment plan is not always possible because you cannot afford the payments. If this is the case and you end up having your vehicle repossessed or are about to do so. It’s essential to look forward and make sure you are aware of the other possible issues that may arise after the repossession of your vehicle so that you can protect yourself from them.

You may end up in a situation after your vehicle is repossessed where you still owe money to the finance company. This happens when the sale of the car doesn’t cover the outstanding debt you owe. Meaning you have something called a shortfall. This shortfall may include other charges, so the amount could be higher than you believe you owe.

Handling the Remaining Car Finance

Car finance companies will want all the money paid back to them and may pursue you aggressively for the shortfall. So, make sure you handle this situation carefully. Our article What happens when a car is repossessed? in the purple box below, will help you understand how to approach the problem. Read through it before you take action.

Is Car Finance Right for You?

We understand that you need a reliable vehicle to get around, not an old banger that keeps breaking down on you. You may think car finance is the route to purchase a new car, so you have that reliability. Having that peace of mind that the vehicle will start in the morning so you can get the kids to school or get to work on time is a big thing.

Exploring Better Options

However, as you may already know, risks are associated with taking out finance. So, what would we class as alternatives? We’ve thought about this and written an article to read that will give you some ideas. You’ll find that in our article What is Car Financing? Is it worth it? In the purple box below.

Credit can be very easy to access, making it tempting for many people. Remember that most people who turn to credit do so because they cannot afford to purchase what they want.

If you’re considering car finance, it's probably because you cannot afford to purchase the vehicle you are interested in outright. If you cannot afford it, should you even consider purchasing it? This is the question you should ask yourself!