lost my job but have a car payment on new loan, can i just return my car to credit union? will i still be responsible for anything else? if they already have the car why will i still be responsible?
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You will be responsible for the difference in money from what you borrowed to what they can sell the car for, plus legal expenses. You are far better off to sell the car yourself, handling all that work.
Most lenders will work with you if you can show them that you actually have lost your job. I don’t think that they just take your word for it, but you can show them your separation papers or give them the name of your previous boss so they can call and confirm.
Voluntarily surrendering a vehicle is a very expensive proposition. First, you have to call and tell them what you’re wanting to do. They will instruct you where to bring the car. There will be paperwork you will fill out surrendering the vehicle.
Then they sell the vehicle at public auction. Usually, they get far less than the “payoff” amount of the loan. Let’s say they come up $5,000 short (which is very common–sometimes more). Then they add the administration fees they charge for handling the repossession, listing, and sale. Then they add the commission they had to pay the auction company to sell the car.
So you could be without the car and still owe the credit union $6,000 or more. If you can’t pay them, they will take you to court and get a court order to have the money deducted from your pay each month until the balance is paid off. When you get another job, that is what will happen except you will not have a car to drive either.
Say it takes you a couple of years to get another job and the credit union just gives up on you. Then they do what is called a “forgiven debt” where they write off the balance as gift to you. You then get a form 1099C where they declare to you and to the IRS that they have forgiven you $6,000 in debt. That now becomes taxable income to you when you do your income tax return for that year.
In the meantime, for the next 7 years or so, your credit history is ruined because the credit union also reports all of this on your credit history and nobody will lend you money for anything, including buying another car several years later.
So it is best to try everything you can to work with the bank to prevent having to give the car back. Times are really hard all over right now and you certainly aren’t the only one facing this situation. You need to go in person to the credit union and speak with the loan manager. You might be surprised what they can do for you.
You don’t have anything to lose by talking with them.
They won’t want it. They are a bank, not a car dealer.
If they repossess it, they will sell it for whatever price they can get which is usually much less than you owe. They will then pursue you for the difference.
You are still responsible because you borrowed money from them. You didn’t borrow a car. You are responsible for the debt whether you have the car or not.
No the credit union does not want your car. Call them and ask if there is a way of postponing payments for 2 or 3 months while you search for a new job. If the car is repossessed you owe the balance. If you borrowed 20k and the car resells for 10k then you owe the credit union 10k
If you owe more than the car is worth, you will owe the CU the difference. And, if the CU has a “right of offset” clause in the contract, they will confiscate your savings to pay the balance.
Welcome to life in the real world.
You can’t just turn it in to them. If they repo it they’ll sell it, and if they sell for less than you owe on it, you’ll still owe the rest.
Contact a bankruptcy attorney and see what your options are. As told, if you surrender the auto and it is sold for less than the balance owed, they will sue you. Sorry.