While sub-prime mortgage led to the housing crash in 2008, a different type of sub-prime lending may be responsible for the next economic disaster. As many as 90% of American households own a car. While this has become a necessary evil, not all car loans are created equal. Sub-prime auto loans are on the rise and as of 2013, 27% of all auto loans consisted of sub-prime and deep sub-prime loans. This is a 7% increase from the previous year and as this article point out, it may be something we want to keep an eye on. Auto repossessions are on the rise and while the overall percentage remains relatively low, this trend may be cause for concern.
Auto repossessions can have serious repercussions on an individual’s credit score. Not only does a repossession remain on your credit report for 7 years, a person is also left with a deficiency balance once the vehicle has been auctioned off. A deficiency balance is the amount owed once a secured debt has been sold off but is sold for less than what is owed on the loan. While this is a debt that remains having over your head, you can also be sued be the loan holder for the remaining balance. If you have recently had an auto repossession and now owe a deficiency balance, it may be time to consult with a debt settlement attorney. An experienced debt settlement attorney can likely negotiate a principal reduction on the deficiency balance, while protecting your legal rights.
Author: Kevin Fallon McCarthy