It is always better to work things out before the bank or finance company puts a bounty on the car or whatever the collateral. Contrary to popular belief many times they will work something out. I know you are thinking how ridiculous banks are and how will they possibly work something out with me? It hasn’t been until very recently that I noticed they were actually honoring some of the loan modifications for the housing market.
Housing and car repossession differences
It is different, the repossession department is relatively smaller, usually the representative working your account has a decent amount of authority to do extensions or work out deals, while the mortgage sections you are dealing with a bunch of collectors that have zero authority to make any deals and it has to go down a line to a boss somewhere and rarely makes it to them.
In a housing market they want to finally foreclose and get that property back on the market, salvage some cash. In the car repossession, the car is worthless usually, the interest is much higher and the loan term is much shorter, smart to work things out if at all possible. The cost of repossession on a car can easily be a 3rd of the cars worth, that includes repo fee, skip trace fee, storage, auction sale fee, title fee and as you can see, the costs keep growing and when you are dealing with a car that depreciates badly and is a few years old, why not work a deal? Makes total sense.
However, with finance companies you may find some similar garbage that you do with the mortgage companies. The people you are speaking to on the phone are just collectors, the supervisors cannot make deals, the repossession section is high volume so the chance of them meaning a manager with authority looking at your case to make a deal is slim to none. For them it is just a numbers game, the end of the quarter losses. So your 2007 Toyota Camry even if it loses money will be on their auction line.
Getting the car back
Usually you have some time by law to bring the account current and get the car back. A normal bank will do this more often and it also depends on if you hid the car or not, were you cooperative on the phone? Did you answer the phone when they called? Were you honest enough with them? Has your history been good or is it a new loan? Many considerations go through, and by paying the account current you will probably get the car back. Other times they can call the loan due, meaning you must pay the entire balance to get the car back.
Buy here pay car lots usually give the cars back by bringing them current. They add the repossession fee on the back end of the loan, some might make you pay that up front as well to get it back. But from what I have seen at least 80% of the buy here pay here people get it back. I know because I would repo the same cars over and over, they would just get thousands added to the loans on the back end.
Making the right decision at first can mean getting better service later. These finance companies will hardly work with you. Once you are in repo status, make sure you make a payment or two right away and hold on to the car if you are able to pay. Otherwise your chances are very low. Try to use a bank if at all possible, better yet a credit union would be ideal.