Re: Can dealer repo car with ONE late payment?

Posted by Mr Pibb (65.161.188.11) on January 14, 2004 at 13:05:55:

In Reply to: Can dealer repo car with ONE late payment? posted by Puzzled on January 14, 2004 at 03:24:46:

You said:
"My sibling has been making payments on a used
car with no hiccups for the past 14 months, and
will be late this month."
Then you said:
"Isn't there more of a grace period than a week after the payment is due before repossession?"

It doesn't sound like "will be late", but rather "week after the payment is due".

This matters a lot, and let me explain why:

It sounds as if your sibling used what is called "In-House" financing to purchase the car. This is quite common and a lot of small dealerships use this method and advertise "No Credit Check! - Bad Credit, No Credit. No Problem!" Here's how it works:

1. The dealer buys a car cheaply, usually at auction, for well under black book.(Example: a '95 Saturn for $800).
2. They detail the car and put it on the lot, sometimes with a sign that says how much down (Ex: $1,000 Down).
3. The price they will charge you for the car will be much higher (Ex:$2800).
4. Interest rates can vary from 0 to 20% (or more). The payment amount is also usually a flexible thing. It's really up to the Car Lot's owner/manager.
5. You have no credit (or bad credit) but need a car, so you get together the money for the down payment, show the salesman several paystubs to prove you have a job, and if they like you, they write up a contract and they sell you the car with a lien on it (if they don't like you they just make you put more $ down). Liens are different in each state. Some allow the dealer to keep the title and register the car in your name. Other states require that the title be in your name, but with the Lender listed on it as a lien. Same thing legally no matter which way you look at it.

Here's the catch:
1. They already made most or all of their investment back with your downpayment.
2. If you pay off the car all is well. They make all that money and interest and you can use them as a credit reference.
3. If you don't pay, they repo the car and put it back on the lot. No loss there because someone else will come along and buy it.

Car dealerships are all "Buyer beware" and there are good and bad ones. In-House financing is a good business but the late/non payments and repos can be a hassle. Lots of people hide the car when they can't make payments, or trash the vehicle then stop paying.

Most of these dealer's are family businesses, not big corporations, and will generally allow a couple late payments as long as the buyer calls and lets them know what's going on ahead of time. They will usually charge a late fee when this happens. Some tell you up front that if you miss even a single payment they'll take the car back. some don't tell you that but it's probably still in the contract. They make the rules!

Even if the dealer is a nice guy, if you are constantly late, and don't talk to them face-to-face to make arrangements, they will probably get sick of you and repo the car the next time you are late.

Someone else mentioned reading the contract. Your sibling should do this, and then go to the dealer, face the music, and beg for an extension. It is possible that the dealer just wants to "hold" the car until they receive their payment.

Follow Ups:

Post a Followup