What to Do if Your Car Loan is Sold

In rare cases, some banks go into insolvency or acquisition and sell all pending loans. In this case, a loan is considered cancelled.

After your loan has been sold to a finance company, you might have to renegotiate the terms of your loan. Let's look at several scenarios you might find yourself in after getting a car loan.

Car Repossession

If you bought your car on loan and started falling behind on your payments, you might be facing repossession soon. The lender has the right to repossess the vehicle when the borrower defaults on the loan. Some car dealerships might reach out and make special payment arrangements, but this is extremely rare. If the car is repossessed, it does not mean that your loan has been cancelled. 

After repossession, the lender will still expect the borrower to pay off the remaining auto loan and the additional costs incurred during the repossession. If the lender is forced to sell the vehicle, the borrower has to incur the fee of putting the car on sale and selling it. The good news is that once the vehicle is sold, you only have to pay the difference between the loan balance and the car's selling price. Is your car getting repossessed? Get in touch with Bills.com for the best advice on how to proceed with paying off your debt.

In most cases, a car repossession come back to bite you in the future because car dealerships might attempt to charge your credit card for years after they have repossessed the vehicle. Some car dealerships might sell the loan to multiple collection agencies to collect on the debt. If possible, avoid getting your car repossessed like the plaque.

Purchase Loans

New car dealers seldom finance cars themselves; they work with banks and other financial institutions instead. These companies are responsible for following up with the client in the event they miss any installments. The company also receives payments and makes unique schedules for defaulting clients. 

If Your Loan Is Cancelled

In rare instances, a bank may cancel out your loan, meaning that you no longer have a loan to pay off. Most loan cancellations happen as a result of a banking error. If you receive any notification that your loan has been cancelled, call the bank immediately. 

If possible, visit the bank physically and make a formal inquiry regarding the matter. It would be unwise to stop making payments before receiving confirmation of cancellation. If your bank cannot find a reasonable explanation, ask to speak to someone with authority to offer a better answer, preferably a banking manager.

Conclusion

Many families and individuals find it impossible to function without a car. We all rely on our vehicles to take us from one place to the next. However, buying a car on loan has very real risks that could harm your financial health in the future. If you learn your car loan has been sold, make sure you get in touch with the purchasing entity and keep up with your payments just the same.