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Can you be sued by a car loan lender for a leftover balance?
My lender repossessed my car two months ago and I haven't paid off the remaining balance. Can they sue me for this? I thought it just gets charged off.
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear your car was repossessed. While some lenders may charge off the
car loan
balance after a repossession, lenders are in the business of making money. As such, a majority of lenders will take you to court for the remaining balance, known as a loan deficiency lawsuit.However, lenders usually give you ample time and warning before they go to court. In most cases, you should start to get phone calls and mail from either a collection agency or a collection law firm. They only go to court as a last resort, as the court costs take a big chunk out of the settlement they get from you.
If you get a summons to appear in court, don’t ignore it. If you do, a default judgment will likely be made against you, meaning you’ll have to pay the full amount without any negotiation or arbitration.
In the future, you should address any shortfalls in paying for your loan immediately. Contact the lender to discuss payment deferment options or negotiate a new, temporary monthly payment. You can also find other ways to save money to pay your loan.
Aside from cutting extraneous expenses, consider
refinancing
in the future if you ever run into payment issues. Refinancing your auto loan is a great way to lower your car payments. On average, car owners pay $85 less every month by refinancing their auto loans. See if refinancing will save you money with the
Jerry
app. View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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