Consequences of Auto Loan Default
Auto loan default can put you in a very difficult situation. In case you are in no position to provide for the car payments, the vehicle that you own may well get seized. Under these circumstances, the lender usually gets in touch with the wrecker company known for car repossessing. As a result, you may well find your car missing one fine morning. However, you can avoid such awkward situation by paying your monthly payments regularly.
Every lender or lending organization has their own rules and regulations in place where you will find the default policy stated clearly. However, the treatment that you can expect from the lenders depends completely on individuals. Some lenders may show up straight away after the auto loan default. They may even drag your car into their storage facility with the intention of selling them some time in the future. On the other hand, some lenders can be a bit lenient and offer grace period as an opportunity for repaying the pending amounts. In case your car gets seized but somehow you manage to pay the loan amount, you will still be held responsible for the payment of the storage fees. In some cases, you may have to pay a heavy price or penalty before tacking back your car.
Auto fraud in relation to vehicle insurance is also becoming very common these days. The insurance company stands to lose as a result of this fraud. To be precise, auto insurance fraud or auto fraud is an act committed by the policy holder for obtaining payment that does not actually exist. Such types of fraud can have a devastating effect on the insuring institutions. In a way, the whole system suffers as the insuring company covers up for the increased costs from other customers.
Today, an auto fraud takes place due to auto accidents as well. However, both auto frauds and auto loan default can prove to be dangerous business. In both cases, you can well end up behind the bars. So, it becomes absolutely vital for you to avoid such frauds and defaults. In the absence of your vehicle you can even lose your job in case you completely depended on your car for daily commute.
The presence of auto fraud and auto loan default in the credit report can prove very damaging and may reduce your chances of obtaining vehicle financing to a great extent. Moreover, you are bound to get a tough time obtaining mortgages and credit cards in case of a bad credit report.
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