Seize or Sue Secured Loans BC
Many times a week we get calls from people who are stuck in bad car loans. It seems like there are a lot of high interest lenders out there these days, and there are a lot of people who get trapped in high interest car loans. These loans can become difficult for people to pay if there are any interruptions in their income.
Another problem I often see with vehicles is that new vehicles go down in value faster than the associate loan goes down. This is especially true for the first few years after a new vehicle purchase. We call this negative equity, meaning that the vehicle is worth less than the loan. This is not a problem if a person completes the loan to the end of the term and fully pays off their vehicle. At that time there is only positive equity because there is no loan.
BUT, what we more often see is people who have recently financed a vehicle, and have negative equity, go car shopping and purchase a new vehicle again. What happens when a person does this is the dealership takes that negative equity from the current vehicle loan and “rolls” it into the price of the new vehicle an adds that cost to the loan. This actually makes the problem much worse and exaggerates the issue, meaning now there is even more negative equity and the new car payments are higher and for a longer period of time.
Here is a quick example to demonstrate this.
Car purchase $40,000 sticker price plus tax and extras comes to $45,000. The loan is for $45,000. The consumer drives the car for 2 years and now the car is now only worth $33,000 but the outstanding loan is still around $38,000 left owing. So this means they have $5000 negative equity. Now they trade it in on the same type of car but 2 years newer and start the cycle all over. This time it is worse though.
New car price $40,000, plus extras comes to $45,000 again. That part might be the same as before. BUT, now the dealer adds in the $5000 negative equity to make the total car loan $50,000. The person drives the car off the lot and the car is immediately worth only $37,000, so that means at this point if the person wants out of the car loan they are actually in a negative equity situation of a whopping $13000. There is no way for them to get out of the car by trading it or selling it. We have seen cases just like this and worse. When this happens people are essentially “stuck”. And if a person is finding it difficult or impossible to make their big car payment due to a recent job loss or other problems, they may feel like there is no way out of the situation and it becomes a financial crisis. If this is you, then read more about how to get out of a bad car loan in BC.
Click here to learn more about your options – http://debtvictoria.com/seize-or-sue-rules/#.WAebRYMrJhE
Legal Disclaimer – this is NOT legal advice, we are not lawyers, this is simply our summary of how these rules affect people in general. Laws should only be interpreted by a lawyer and we recommend that you seek the advice of a lawyer before deciding to try to have an item Seized by a creditor or for any other questions regarding/understanding laws. We also advise that a consumer seek the help of a Debt Relief Specialist such as ourselves or other professionals in the Debt Service industry. Read more about the rules here – http://www.bclaws.ca/civix/document/id/complete/statreg/96359_01
