MovingForward
Wellington,#2Consumer Comment
Thu, October 07, 2010
I understand your point. However, when you borrow money to finance anything, in this case your car, the loan itself has a value that essentially has no relationship to the car's value. Once you sign that note, then the entire note needs to be paid. That is the balance that is showing on your credit reports (plus fees and default interest). This is why you find so many cars that are upside down in value (the loan amount is greater than the vehicle value). Once you sign a note/loan - you owe it. The note/loan stands on its own.
When the loan is a high interest loan, you can see that very little of your payment is applied to the actual principal balance of your loan. The payments are applied to interest and fees first, then to principal. If you make your payment late, as you stated, then the amount of interest taken out of your payment is higher. In some cases, if you are extremely late your balance can actually increase because your payment is not enough to retire the interest due plus the late fees.
The best way to avoid this trap is to buy an inexpensive car for cash. You put $2500 down before when you purchased this vehicle and it bought you nothing but a high interest loan. Buy from a private party. You will avoid the high car payment trap.
As to fixing your credit with this repo, you can make payment arrangements to pay it off or settle with the company. I have never had a repo - but I had something similar. I had totalled my car many many years ago and the insurance only paid off the current value leaving a remaining balance of about $6500. I had to make arrangements with Ford Credit to pay off the balance of the loan - even though the car was totalled! That's how I learned the car loan value and the vehicle value are two entirely different things.
Jim
Orlando,#3Consumer Comment
Thu, October 07, 2010
Get yourself out of this subprime way of life by paying your bills on time! The reason the balance was taking so long to get down was because you had a high interst rate loan. You had such a high interest rate because you made yourself a subprime borrower beccause you gave yourself a reputation of not paying your bills on time. Then you treat a repo so casually. Giving up the car in a repo does not make the balance magically vanish. You are on the hook for the contracted amount, period. There is nothing shady or ripoff about this. You and only you can avoid this by developing a positive credit reputation. But since you treat a repo so casually who knows when that will happen especially if this repo adds to the collection of other repo actions.