Glitches such as defaults (failure to pay one’s loan repayments), repossession, and other problems occur when the vehicle buyer cannot afford the repayments. Keep in mind that the guarantor will also be liable to shoulder these repayments in the event of failure on the borrower’s part.
Late fees are charged every time you fall behind on your car loan payment. A daily interest can also be charged by banks as the overdue amount accumulates, which is usually 5% of the monthly amortization. For example if your monthly amortization is P10,000 then the late payment fee will be P500. So, if you are 2 months behind on payments you will be paying 5% of P20,000.
Banks don’t immediately repossess your car upon one late payment. There’s usually a maximum of three months grace period (depending on the actual contract you signed) to settle your outstanding balance before repossession takes place.
If in case you find yourself unable to pay the bank you could do the following:
Find someone to purchase your vehicle. This could be through a private listing on a car classified website, through a dealer or auction. Before it gets repossessed join AutoDeal.com.ph and we will find you a private or trade buyer.
Your credit score or financial reputation will be stained if you have a car repossessed while under your name. This could pose as a burden whenever you request for a loan in the future. Talk to the bank. Banks understand that people go through difficult financial times so they are sometimes willing to adjust your monthly payments for a while until you can go back paying normally again.