I don’t like to make excuses, but I fell into hard times during 2020, like most people did, and was in an abusive financial relationship. I made mistakes with my credit during this time, and landed myself a repo on a 2017 Civic. This civic was sold off for 12k and left me with a balance of about 6k on the auto loan that shows under the lender still as a charge off and bad debt/collection. I’m finally in a position to get a vehicle again, but I wanted to get some clarity on things and a reality check, maybe. Would that old balance be added to a new auto loan? I plan on paying it off, and would like advice on how to pay that possibly at a discount and if I should pay it first before attempting to get a new vehicle. It drops off in early 2027. I’m in Texas if that is helpful. Also sorry if this is the wrong sub. I will write in correct sub if someone lists it.
How to go about an old auto loan
byu/thezeldahelp inpersonalfinance
Posted by thezeldahelp
3 Comments
The only way the old balance gets added to a new loan is if you’re trading in the last car. What kind of financing you can get with an outstanding repo and unpaid deficiency might be ugly.
No, the balance won’t be added to the new loan. You’re likely past the statue of limitations, so I wouldn’t bother paying it off if that’s the case. It won’t make a meaningful difference on your credit profile, and you may consider just waiting until it does fall off before financing another car.
Been there, done this. I had a voluntary repossession on a car, they auctioned it off and sent me a bill for like $6k. Luckily, I had another vehicle that I drove for about 5 years before I even tried to get another car loan. But, I was ultimately able to with little issue. Interest rates will be higher, you’ll probably need a larger down payment than you previously needed to buy a vehicle. if you make consistent payments for a year or so on all of your accounts after you but the car, you’ll probably be able to refi to a better rate.
I went from 14.99% to 9.5% with a 580 credit score. Not fantastic, but far better than some of the 20%+ rates people get stuck with