Having your car taken away can be embarrassing and hard to deal with on an emotional level, not to mention what it does to your credit report. Legally, the lender who made sure you could drive the car off the lot in the first place has the right to take the car back if you can't pay your car payments. People think that once they give the car to the "repo man," also known as the "repossession agent," they are no longer responsible for the debt and can wash their hands of it.
When you try to get another loan some time later, you are either turned down or given high interest rates, which are usually given to people in the "sub prime" market. The reason for this is that your credit report shows that your creditor put a note on your car loan about the repossession, the amount of the loan, and maybe even the amount of money that was still owed as well as how long it took for the creditor to finally decide to close your account. You might have thought the loan was over, but you still have to pay it back.
Because of this, it is not a good idea to fall so far behind on your car loan that your car could be taken away. Of course, if you had to choose between having a place to sleep, food on the table, and a cool car, you would choose the first two. But did you know that you can keep your car from being taken away? First, talk to your lender and find out if they are willing to work with you. Some will let you skip one or even two car payments per year, which will be added to the end of the loan. Other lenders will let you extend the length of your car loan, which will lower your monthly payments.
If you can't do either of these things, you should sell the car for the amount of money that is still owed on it. Then, give the money back to the lender. This will keep your credit score from going down, which is what will happen if you let the repossession go on. Keep in mind that the lender will charge you a lot of fees just for taking back the car, on top of the amount still owed on the note. Obviously, this won't work if you are already behind on your car loan. You can sometimes go to a car dealership and try to trade in your car for a beater that the dealership will then finance on top of paying off your first car. Even though this is a bit like robbing Peter to pay Paul, it buys you time, which you might be able to use to find that great job that will help you pay off the note.
