How bad does a repo hurt your credit history - should i get reposessed

Discussion in 'Personal Finance Q & A' started by Anne Marie, Jul 19, 2016.

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  1. Anne Marie

    Anne Marie Newbie

    How bad does a repo hurt your credit score, I'm thinking of having my car repossessed because I can't afford the payments. A few years back I bought a Ford on credit and have been making car payments diligently, lately my hours have been reduced and my contract has been switched from full time to part time. I can no longer afford the car payments, I could probably pay for another 2 months but is it worth it if I cant continue the payments until I pay the car off. Can I sell the car with payments or can you have two car loans so I can pay off the original one and get a better loan that's affordable? I'm trying to find a second job and if I'm successful should I pay off my car? Sorry for all these questions but would appreciate some ideas. Thanks
    Tiplady and Simrin like this.
  2. Simrin

    Simrin Newbie

    Your first question was how bad does a repo hurt your credit history? The answer is it will hurt it very much. If you go ahead with your repossession and you become delinquent on debt secured on property this will be noted on your credit file for 7 years. This means that any credit you apply for will most likely be rejected. If you wanted to buy a home you will be unable to get credit. The repossession process is also a nightmare because the last thing you want is people to come to your home demanding your vehicle back. If the vehicle has any small damage you will have to foot the bill and this will be reflected as debt you need to pay.

    The reason you cant make your payments is because your employer has reduced your hours. If I were you I would call the car finance company and explain to them whats happened. Because you've made your car payments diligently and have stuck by the agreement the car finance company might be willing to restructure things by extending the loan, reducing the interest so your payments are more affordable. Explain that you are looking for a better job or a second job and that you just need a little payment holiday to get back on the road. If you have every intention of paying the debt the car finance company will help you.
    Tiplady likes this.
  3. Tiplady

    Tiplady Newbie

    Your credit will be hurt very badly if you decide to on a repossession after becoming delinquent on a debt secured on property. As @Simrin says you will have this on your credit report for 7 years and it will prevent you from getting any real credit. You will have to contact your car finance company to see if you can sell the car. If you are allowed to the price you receive will almost certainly be less than the debt so you'll still have to make payments even with the car gone. Getting a second car loan to cover the first one is unlikely. It is better yo talk to your car finance company and ask them for a restructured deal. I think they will listen because you have been put in this position by your employer through no fault of your own.

    I think you should just pay off the car so your credit history remains untarnished. In the future you might need credit to buy a home or you might need to take out a loan so its important to keep on top of your credit score. Find another job or 2nd job and continue making the payments. in future buy a car with cash or just use public transport or cycle, its less stressful and you are in control.
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