Car Repossessions
Below is an example scenario which tells us why car repossessions are so widespread.
A) Car original price £25,000
B) Initial payment £5,000
C) Loan total £20,000
D) Repayments £5,000
E) Still Owed £15,000
F) Car Auction £8,000
G) Deficiency £7,000
Explanation
A) In this example, £25,000 is the purchase cost for a new car.
B) The customer pays down £5000 deposit.
C) The loan amount borrowed from the finance company is £20,000.
D) The buyer begins to make repayments, and then run into financial difficulty and are unable to complete the remaining payments. The lender then has no option but the car repossessions.
E) The amount still owed to the finance company is 15,000 after the car is repossessed.
F) After car repossessions has taken place, the finance company in order for efficiency sell the car through an auction for £8,000.
G) The Deficiency is the amount the loan company will look to recover after the car repossessions. In this case the deficiency amount will be £7,000.
With car repossessions in this way, you can expect the lender chase the customer for the deficiency amount. your credit rating will also be adversely affected if repayments are not made or even face bankruptcy.
Car repossessions are becoming more and more common and not just in this country, partly due to the current economic climate. As a result of the current economic climate, car owners are experiencing financial difficulties and therefore, are often struggling to make payments on all loans they have – including their car lease payments.
Often in good times, people may opt for luxuries which they can afford, but when times are hard, their situation quickly changes and repayments can be affected.
As a bi-product they suddenly find themselves in economic meltdown and what was a luxury soon becomes a burden.
