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Wilhelm's avatar

Hypothetical: What happens if I stop making payments on my car?

Asked by Wilhelm (61 points ) March 7th, 2008

Ok, first off, I’m not going to do this because of the negative repurcussions it will have on my credit history. I’m just a bit curious about the result.

Ok, so I live in Chicago and I have, literally, no need or use for a car. I DO own a car that I’m making payments on. I still owe about 7g’s, but, according to KBB, it isn’t even worth 1. I can’t sell the thing, because I’d never make enough to cover the remaining principle balance.

So, what would happen if, instead of making payments, buying auto insurance, paying for parking and fuel for something I simply do not need, I just stopped making installments on my loan.

What would happen? Repossession and bad credit for sure, but what else? Because something like this would save me close to $600 / month for the next 3 years.

Just curious is all… yeah.

>_>

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16 Answers

blunckhouse's avatar

The bank would repossess it, and you would have a terrible time trying to get credit for anything for a few years.

carterooney's avatar

The negative impact on your credit would be far worse financially than the $ you stand to save. If you owe 7 K’s on a car that isn’t worth one payment u need shoping lessons!

annaott22's avatar

well if they repossess it they will sell it at auction then ask you to pay the difference on what they didn’t make. I just had mine repossessed and I’m about to be sued for 12,000 but there is no way I can pay it. It’s not a good idea to let it go.

blunckhouse's avatar

Sorry to hear about your situation, annaott, but you get a “great answer” point from me for having real world experience in this area.

cwilbur's avatar

If the car starts and runs, it’s worth a good deal more than $1.

(I’m in a comparable situation – I had my car completely paid off before I moved to the Boston area, and I’ve driven it once in the past two months.)

annaott22's avatar

Well it’ll get better. eventually… thanks for the points!

Zaku's avatar

You could try transferring and/or renegotiating the agreement. Asking others besides the creditor first is a great idea. Just doing nothing seems like it probably isn’t the best option.

nikipedia's avatar

That’s a pretty big gap between owed and worth….do you think you’d be able to trade it in for something that would close that difference, at least?

Wilhelm's avatar

Well, I thought about doing that, but I might be leaving the country soon. The damn thing isn’t even worth shipping to Australia because shipping costs are far greater than it’s value. So, I’d be making payments on something that I, by then, CAN’T use.

Then again, does US credit history follow you across international borders?

carterooney's avatar

To date credit is by Country – when you get to Aus you’ll have no credit there. I was in the same situation when I left debts in the UK. If your going to come back it would be a bad decision to screw up your credit, if its a permanent move it’s a no-brainer – sell the car & hot foot it to Aus!

Wilhelm's avatar

That’s what I thought.

Then again, this is just a hypothetical question. I’d NEVER do something so bad.

>_>

<_<

… I swears.

squirbel's avatar

Can I waste a post just to laugh?

Lol! <.<

^.^

clairedete's avatar

Dog the bounty hunter will come and bust down your front door. Personally, I want that mullet nowhere near me!

gailcalled's avatar

@squirbel; take the hahaha to private comments, please.

@wilhelm: one used to be able to give a car away to some charitable organizations and get a tax deduction. I don’t have time to do the research so don’t know whether it is still possible. The organizations were willing to take clangers as long as they ran.

squirbel's avatar

@gailcalled: I’m sorry if this sounds rude, but it wasn’t a personal laugh directed at an individual…

smartbob's avatar

Basically, the car belongs to the bank. So if you stop paying the bank, they take the car. Then they auction the car to try to pay off the loan. Whatever is left on the loan is STILL your responsibility to pay. Just like a credit card. They can sue, mess up your credit, and all sorts of other things. If the bank auctions your car, they don’t really care about how much they can get for it since you owe the rest anyway. Best thing is to sell it yourself, and get as much as you can. Then you will be making payments on a car you don’t own, but they will be less than you are paying now since you paid off some of the balance with the sale of the car.

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