Overhaulin'

Can you get out of a car loan without the car being repossessed?

My friend has a loan for his car and he does not have the title, the loan company technically owns it. He is discovering that he can no longer afford the payments and wants to get out of the loan. Is there a way to do that without waiting for the loan company to repossess the car? I am not sure if it matters but he lives in Pennsylvania.

Public Comments

1. Of course not. You either pay for the car or lose it. There's nothing in between.
2. A lot of times if he contacts the company and advise him of the situation they can help him out. In worst case scenario, he can turn in the car which would be better then a repossession on record, but would still effect his record for a period of time.
3. He would have to sell it and make enough to pay the loan off completely. He can call the lender and get a "10-day payoff" balance, and hope the vehicle will sell for that amount. But, he must be realistic... if he owes $10K and the car is worth $5K, no person is going to pay way over book for the car. It wouldn't matter if he had the title or not, the loan would have to be satisfied in order for a transfer of ownership to occur. As alluded to, as long as there is a balance on the loan, the lender owns the vehicle. I need to clear up something. Voluntarily turning the car back to the lender (called a "voluntary repossession") or waiting 'til the lender sends tow trucks carry the same stiff penalties. Allowing for a voluntary repo hits his credit the same, and he will still be responsible for quite a bit. The car will be sold at auction, bringing pennies on the dollar, and he will then be presented for a bill for the difference between what it sold for and what he owed, plus repo fees, admin fees, etc. This usually comes via certified mail. If he cannot pay this or work something out with the lender (or just flat-out ignores it), they can and will take him to court. The court (depending on the state involved) can order wage and/or asset garnishment until the judgment is satisfied. Keep in mind, not only will the earlier amount be due, but court costs as well. So, by the time he's done, he has both a repo AND a judgment on his credit, effectively shutting down anything for 7-plus years. He doesn't want that. He needs to do what he can to pay that note, or get on the phone with the lender NOW and work something out. Ignoring it won't make it go away.
4. The only way out of a car loan is to...PAY OFF THE LOAN. Anything else will result in a repossession. Even if the vehicle is repossessed, he still has to pay for it. The car can go away, but the loan remains.