Voluntary repossession doesn't protect you from a deficiency judgment
Four emails came within last 2 days with the following question - if I voluntary give up my car to the lender which is known as Voluntary Repossession, will I be protected against a deficiency judgment? For the readers unfamiliar with this term, a deficiency judgment is the difference between what you owe on your loan and the smaller amount your creditor receives from selling repossessed car. No you won't be.
Voluntary repossession is still a repossession. While the creditor expenses and time in repossessing the vehicle are reduced, if the outstanding loan higher than the proceeds received from the car sale, you must cover the difference. Since many cars depreciate rapidly and are purchased with 60- or even 72-month loans with high interest rates, huge number of borrowers owe more than their cars are worth.
Tue Nov 4, 2008 04:11PM by Tony | More in Personal Finance | Comments (0)
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