![]() ![]() ![]() If not, the lender/bank could move a court to claim it. For instance, if an individual owe Rs 400,000 to the lender/bank at the time of repossessing but the car only sells for Rs 3,00,000, one will have to pay the difference of Rs 100,000 to the lender/bank. A default is the difference between the value of the car at the time the lender/bank sells it and the actual outstanding loan balance that the borrower owes on the car loan. The borrower might also have to face a default judgment. This might force them to get into bad credit market where interest rates are threateningly high! The borrower's credit record will be affected and the borrower might not be in a position to avail any new loans for the next 7 years. There could be other serious fallouts of the default for them. Usually, the lender/bank informs the customer at default about the place and timing of the auction so that if they want to bid or just see how the auction goes they can do so.īorrower's troubles do not end when the repossessed car is sold off at an auction. The auction details are well advertised and done in a commercial manner. If it would help the borrower to make a timely payment, the lender/bank might agree to waive off the late fees.Īs said, a repossessed car is often sold at an auction to pay off the default loan amount. If the borrower feels that these accumulated late charges are actually straining them from making a prompt payment, they can always ask their lender/bank to waive off these fees. Late charges are often levied on late payments. The borrower can explain the lender that giving them a month's time for the repayment can give them some flexibility to pay.Īlong with it, the borrower can also convince the lender/bank to change the payment due date permanently. It means that borrowers would be allowed to skip the current month's payment and make it at a later date. ![]() This will ensure that the monthly commitment to pay the EMI is reduced.īorrowers can also ask the lender/bank to allow making a deferred payment. For instance, if one had originally taken a car loan for 36 months, one could request it to be extended to 48 months. The lender might have heard the excuse thousand times before but being straightforward could work in customer's favour and this could then eventually bring about a mutual adjustment that would prove beneficial for both the parties.Īpart from this, there are many other options available to a car loan borrower.īorrowers can try to talk and convince the lender/bank to extend the car loan duration. So the moment one finds trouble in repaying car loan, one should call up their lender/bank to cite and explain honestly the reason for the delay in payment. ![]() The problem starts when the borrower starts avoiding the lender/bank as they are unable to pay back their car loan. It is very important to know what one should do when one realises the fact that they might not be able to make the car loan repayment for the month and avoid being tagged as a customer at 'default.' Though the term 'default' has no universal definition to it and differs from case to case, 'default' generally happens if an individual is 30, 60 or 90 days late on making one or more payments. The agreement also provides for the risks involved and the possible solutions in case of a default. Usually, the car loan agreement that an individual signs with any bank will have these terms and conditions clearly mentioned in the agreement.ĭetails about the car loan, loan repayment obligations and the possible reasons for defaulting on car loan are usually explained in the agreement. Technically, a car loan default happens when a customer repeatedly fails to make the agreed car loan payments to the bank that loaned the purchase of the car. ![]()
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