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During the inflation period, many people who are in debt may begin to feel that they can’t afford to pay their car’s installment anymore and think that it would be better if they let the cars be seized. Is it really better? Is there any way else to help solve this problem? Let’s find answers together.
Can’t pay for the car’s installment and let the car be taken away is a very wrong thing to do. Let ACU PAY explain the principle of car seizure first. Normally, our cars are seized only when three installments are defaulted. Finance will now send a letter stating that the outstanding payment is due within 30 days from the date we receive the letter. If more than four installments are not paid, banks or finance will cancel their hire purchase contracts and seize cars.
However, you do not get rid of the burden after your car is seized because after finance put our car up for sale, and of course, the price would be so low that it couldn’t close all the debts we borrowed in the first place. As a result, we are left with a lot of other debts and claims that will be filed for a lawsuit, not including interest that you will continue to pay and loss of credit history which will make getting the loan difficult the next time.
So if you can’t really afford to pay for car installment, look for other alternatives to help as follows;
1. Ask for restructuring of one’s debt
Most creditors, or finance, offer help such as debt restructuring, an extension of the installment period, or a progressive installment such as small-scale installments during financial difficulties and gradually increase when the problem is eased. However, caution should be exercised because extending the grace period will also affect interest rates higher.
If you’re going to start a debt restructuring, it is recommended that you proceed quickly before overdue to maintain your credit history.
2. Should not sell to others without changing contracts
Selling a car to someone else but not changing the contract is a “not very desirable” way because if the person who buys the next car does something about it, we who are still on the list of tenants may be able to take responsibility for future problems which are not worth doing. Therefore, it is recommended that you should try a different approach.
3. Ask finance for paying only interest
It is another way to deal with the problem of not being able to pay your car installment, which may help by contacting Finance to ask for interest repayment only. It is recommended that you know yourself early that you can’t repay your car and contact Finance as soon as possible.
4. Change the contracts
Announcing to find a new hire purchaser may be another solution for those who don’t want to lose their credit history. By changing contracts, buyers and sellers must complete price agreements, and sellers or existing owners who can’t afford to pay off the remaining installment use the money from the sale to pay off all existing debt with the Finance. It may lose and incur a small change in contract costs but is free of debt.
5. Return the car to your finance before you’re overdue for your installment
Finally, if you feel like no matter how many steps you have tried are not helping you to continue paying car installments, can you return the car to Finance? The answer is you can do it by returning the car to your Finance quickly before you default on three payments or return without default or any installment due to the fact that the hire purchase contract can be terminated by the hire purchasing at any time.
After the car is returned, the lease will be terminated. We will not have to pay any damages such as loss of benefits, and debt collection, but still have to pay the difference of the selling period, and the deteriorating car cost.
In this regard, we will choose which method depends on the value of our car, the value of our debt and the ability to repay our debts.
