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The loan keeps showing up on my credit report. They offered me a pay off but I can't afford to pay it off. I asked the loan company what to do? And they can't give me a answer...

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    I recall reading on here recently that you DO NOT want to do a voluntary reposession because that is still a reposession. You want to sell the car and use the money to pay off the loan.
    – DKNguyen
    Commented Nov 25, 2023 at 1:59
  • Isn't there an insurance going with the loan which should take care of paying off the loan in such a case? What country (and state, if relevant) are you in?
    – jcaron
    Commented Nov 25, 2023 at 13:46
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    No, loans are rarely if ever insured, at least in the US. The bank is protected (partially) by the lien on the collateral, in this case the car. The borrower can do whatever they like, but there's no reason any insurance company would want to sell you insurance on your borrowing.
    – keshlam
    Commented Nov 25, 2023 at 19:50
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    @keshlam Wrong. Credit Insurance is most definitely a thing in the US. Why would insurance company want to sell it? It comes with high profit margins since covered events (death, permanent disability) are rarer than people think. The most common event, layoffs, only comes with a deferral. This is often pushed by dealership finance people to less-qualified borrowers who don't have a cushion fund. The UK had a major scandal over this.
    – user71659
    Commented Nov 25, 2023 at 21:50
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    Sorry to add to your problems, but one other thing you should check is, who actually owns the car now - simply being a co-signer may not actually grant you ownership of the car, unless that is in the original loan agreement.
    – DavidT
    Commented Nov 28, 2023 at 1:44

1 Answer 1

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Condolences on the loss of your son. Unfortunately, there probably isn't a lot to do here.

A co-signer is equally responsible for repaying the loan as the borrower. From the finance company's perspective, they'd probably lose money repossessing the car-- most cars depreciate faster than the loan balance declines until close to the end of the loan. They've got a borrower that is legally responsible for paying off the loan (you) and they think you're likely to be able to pay. So they're not interested in repossessing the car and taking the loss, they'd rather take the risk that you're going to keep making the monthly payments.

You could sell the car and pay off whatever the difference is between the value of the car and the balance of the loan. That's likely to be a decently large number though. Or you could keep making the monthly payments.

It is possible that the finance company would be more willing to repossess the car if they thought you were unwilling to pay. But that would require actually not paying and dealing with a charged off loan and a repossession on your credit report. That is probably not something you want to risk.

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    Remember, they don't want the car. They want the rest of their money.
    – keshlam
    Commented Nov 25, 2023 at 0:09
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    @keshlam - Exactly this. Car finance companies aren't in the business of selling cars, they're in the business of selling loans. The car is merely a tool to get you to take out a loan.
    – Valorum
    Commented Nov 25, 2023 at 13:03
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    And to try to enforce your paying the loan, and to recover part of the money should you default on the loan. But foreclosure does only get them part of that money, so they are going to be very unhappy with you if they have to resort to that, which is why it's such a bad thing for your credit rating. If you find you can't afford the car, the responsible thing to do it to sell it yourself and use that money plus as much more as is needed to pay off the loan. Remember, you agreed to this.
    – keshlam
    Commented Nov 25, 2023 at 14:10
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    "Or you could keep making the monthly payments." and keep a car you don't use, that's rapidly depreciating. not many good options in that situation...
    – njzk2
    Commented Nov 26, 2023 at 19:31
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    @DavidSchwartz: The loan holder needs to permit the car to be sold, accept the proceeds, and reset the payment amount based on the remaining outstanding (so the remaining loan runtime it the same). But they're being pointlessly obstinate and driving OP into serious financial trouble for a few bucks. They're themselves taking a gamble of a huge loss at this point too.
    – Joshua
    Commented Nov 27, 2023 at 1:36

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