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Can I Remove a Car Repossession From My Credit Reports?

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When it comes to getting new credit, a repossession can really hinder your ability to take on another car loan, since auto lenders see a recent repo as a big red flag. A repossession stays on your credit reports for up to seven years – that’s a long time! However, after each passing year, the impact on your credit score lessens, and it does eventually fall off your reports.

Once Your Car Has Been Repossessed

Can I Remove an Auto Repossession From My Credit Report?After a vehicle repossession, you may be wondering how it escalated to this. Usually, a repo is a response to an auto loan default, which is caused by missing too many payments, or possibly even one payment (depending on the language in your loan contract).

Once your car has been taken away by the repo man, it’s usually prepared to be sold at auction. Lenders typically sell repossessed vehicles in an attempt to cover your remaining loan balance.

If you want to get your car back, you may be able to get in contact with your lender before it’s sold. In many cases, your lender has to notify you of when and where the vehicle is going to be sold.

Sometimes, a lender gives you the option to reinstate your auto loan if you agree to make up the missed payments, or if you can pay for the remaining balance in full. For many people, though, this isn’t an option.

After the car has been repossessed and sold at auction, the repo is probably already on your credit reports or about to be reported, and this can drastically lower your credit score. Not only does your credit report likely reflect the repossession, but the missed or late payments that led to the default are also harming your credit, too.

Once the repo is reported on your credit reports, your vehicle is probably long gone – been taken away, sold, and then reported on your credit reports. This means that the chance to negotiate the repossession with your auto lender is probably off the table.

If you’re in the position where you still have your car, but you’re worried about defaulting, contact your lender and ask about your options if you’re trying to overcome hard times.

Can You Remove a Repo From Your Reports?

Once a repossession has happened, removing it from your credit reports is difficult.

If you want to remove the repo from your reports, and it was legitimate, you’re probably going to be stuck with it. There are ways to remove accounts from credit reports, but it involves proving that the account is inaccurate or outdated.

When you want to remove something from your reports, it’s called filing a dispute. Oftentimes, you’re required to provide proof that the account you’re disputing is incorrect. If you have a bank statement proving that you’ve settled an account or one that proves you’ve made your payments, you can send those to the credit bureau reporting the inaccurate account, and they’ll remove the error from your credit reports if they find it’s a true mistake in their investigation.

However, a repossession that came about because you defaulted on your auto loan isn’t likely to be removed. If you missed one too many payments, and they were reported and proven by the lender, removing the repo probably isn’t possible. Typically, once you file a dispute, the credit agency must investigate the claim within 30 days. The heart of a dispute is that you’re saying that is listed on your credit reports is incorrect or inaccurate.

If you can prove that the repossession was a mistake, you could probably get the repo removed from your credit reports. If the lender repossessed your vehicle and you hadn’t missed any payments, then you could prove that with receipts and bank statements showing you made your payments on time, get your car back, and then have them remove the repo from your credit reports. This is rare, though. The process of a repossession is a costly and lengthy one for the lender, so an accidental repo isn’t likely.

If your repossession was the result of a default, it won’t be on your credit reports forever! Nearly everything negative on your credit reports falls off after seven years. Every year after the repo, the adverse impact on your credit score does lessen. If you need another vehicle, you still have options for financing even with a repossession on your credit reports.

Car Buying Options After a Repo

Since a legit repossession is there to stay on your credit reports, you’ve got a few other options to check out for your next car. Here are three routes to look into:

  1. Private seller or pay cash – Working with a private seller and paying cash could be a way to skip over the credit check that most auto lenders require before you can get financing. A private sale may not yield you the most security or peace of the mind that the vehicle is in good shape, but when you need transportation and lenders won’t give you the time of day due to a recent repossession, it’s worthwhile to check out. Since it’s a private sale, it won’t be reported and your credit reports aren’t likely to be run by the seller.
  2. Buy here pay here (BHPH)BHPH dealerships use in-house financing, which means that your dealer is also your lender. Most dealerships separate the two roles, which means that you’d typically need to find a third-party lender or work with the lenders that are signed up with the dealer, not at a BHPH used car lot! They do everything themselves, and this means that they usually skip the credit check, so you’re likely to get approved for financing if you’ve got the income and sizable down payment even with a recent repo. However, BHPH dealerships may not report your on-time payments to the credit agencies, which wouldn’t help repair your credit.
  3. Subprime lender – These third-party bad credit auto lenders are signed up with dealers that have a special finance department. They do check your credit, but they also look at many other aspects of your financial situation to determine your ability to take on a car loan. This means evaluating your residency history, income stability, credit reports, and requiring a down payment. If your repo is over a year old, a subprime lender may not be able to work with you right away, but it can be an opportunity for credit repair. These loans are reported to the credit reporting agencies, so a good payment history does rebuild your credit.

Getting Back on the Road

If you’re ready to put a repossession behind you and get into your next auto loan, start right here with Auto Credit Express. We have a nationwide network of dealerships that work with bad credit lenders.

To begin, fill out our no-obligation, secure, and free car loan request form. We’ll look for a dealer in your local area that can work with unique credit situations.

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Debt consolidation programs: How they work

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If you’re trying to pay off debt, you’ve probably looked into the variety of options that could help. If so, you’ve likely come across debt consolidation programs — and may be wondering what they are.

Debt consolidation programs can help borrowers who may be overwhelmed by debt payments by combining multiple loans into a single payment. Typically, these programs are offered by credit counseling organizations. These organizations may offer guidance and financial planning in addition to helping consolidate debt.

A reputable credit counseling organization will likely incorporate guidance to help with managing debts, along with providing educational material, workshops and other ways to help borrowers work to develop a realistic budget.

A legitimate debt consolidation program should feature counselors who are certified and trained in offering advice on consumer finance issues in order to create a personalized plan, whether it’s to address credit card debt, bad credit or other needs.

Consolidating debt typically results in a refinanced loan, with a lower or more manageable interest rate and modified repayment terms. According to the Federal Trade Commission, it is recommended to find a local debt consolidation program offering credit counseling in person.

You may find these accredited, nonprofit programs are offered through channels like credit unions, universities, religious organizations, military bases and U.S. Cooperative Extension Service branches.

(It’s important to note that everyone’s debt payoff needs differ, so your mileage may vary.)

Related: Paying off debt—9 strategies to try

What Is a Debt Consolidation Program?

Debt consolidation programs can play two roles. For one, they help borrowers combine multiple loans into a single payment, which can make repayment less overwhelming. For another, they act as credit counselors.

With tools for loan repayment strategies and debt management, they can help lower or simplify monthly debt payments. These types of programs are usually managed by credit counseling companies.

It’s good to note the difference between debt consolidation programs and an actual loan opened to consolidate debt.

Qualifying consumers can use a debt consolidation loan (typically an unsecured personal loan) to combine multiple debts into a new single loan as well, possibly with a lower interest rate. But there is no counseling offered during the loan application process, and paying down the debt remains entirely the burden of the borrower.

The services outlined above can make a debt consolidation program different from other methods of consolidation or interest reduction, such as a balance transfer for a credit card, or a personal installment loan from a banking institution or lender.

Keep in mind that debt consolidation is also different from debt settlement, which is a process used to settle debts for less than what is owed.

When enrolled in a debt management program, which is one part of a debt consolidation program, a single monthly payment is sent to the credit counseling agency, which then distributes an agreed-upon amount to each credit card or loan company. The goal of the program is to act as an interlocutor for the debt between the borrower and creditor.

While most debt consolidation program companies are nonprofit organizations, nonprofit status does not guarantee services are free, or even affordable.

These organizations can, however, reach out to the lenders on behalf of the borrower to find an affordable repayment plan, which could take shape in the form of waived fees or penalties, lowering interest rates, in exchange for a specific timeline of usually three to five years for the debt to be repaid.

These programs are not loans, which would come from financial institutions. Perhaps most importantly, debt consolidation programs do not make any promises to reduce the amount of debt owed. Those are debt settlement programs, run by outside companies who negotiate payments with creditors, and can be for-profit, predatory or may not act in the best interest of the borrower.

A debt management program, on the other hand, could help set borrowers up for future success, when it comes to how to budget and manage money, educating consumers about cutting expenses or ways to increase income in order to gradually eliminate debt.

Pros and Cons of Debt Consolidation Programs

Debt consolidation is typically most beneficial to those struggling with high monthly debt payments. Paying just the minimum balance on debts every month means it could take a long time to pay off the debt, and interest costs could continue to add to the balance. Getting rid of high-interest debts can help make it easier to pay off the principal amount of the loan.

While having a lot of debt is certainly stressful, it’s worth weighing the pros and cons of any debt consolidation program before signing up. Here are some pros and cons to ponder:

Pros

  • Multiple payments are combined into one payment, likely making it easier to pay on time.
  • Credit counseling could help a borrower get back on track with tools like budgeting and other financial advice.
  •  Some programs can help negotiate lower interest rates, fees, possibly creating a more affordable payback plan.

Note: Because lowering interest rates may extend the number of time borrowers would pay their debt off, they may end up spending more on interest in the long run.

Cons

  • Debt consolidation programs do not reduce the principal amount of debt owed.
  • They can easily be confused for more predatory programs offered by some debt consolidation settlement companies.
  • Some programs might charge fees.

Many of the legitimate counseling companies tend to follow a similar setup process, which typically includes an interview with a counselor to go over things like income, expenses, and current bills and loans. The counselor might suggest areas where spending could be reduced and offer educational materials.

The program may also help set up a budget and will send the proposal out to creditors to agree to any new monthly payments, fees, payment schedules, interest rates or other factors, Reputable programs should only charge for set-up and a monthly fee.

It is generally recommended to take extra care with any for-profit organizations requiring a lot of upfront fees, memberships, or fees for each creditor they work with on negotiation. There is no magic pill to reduce debt, so spending less and budgeting more have been key pillars of a healthy financial foundation.

No company should promise a quick turnaround for becoming debt-free overnight. Historically, credit repair has been a market tainted by fraud, so it’s recommended to tread carefully and do the research before signing on to any program.

Selecting a Debt Consolidation Program

One common and simple way to sign up for this type of debt management program is to contact a reputable nonprofit credit counseling agency. The U.S. Department of Justice offers a list of approved credit counseling agencies by state.

Along with ensuring the agency you’re considering is on this list, you may want to consider doing further research by asking your state attorney general and checking local consumer protection agency websites.

Debt settlement companies often try to sell themselves as the same service, so be wary and check to be sure the organization is offering financial counseling and not making promises to reduce the amount of debt owed.

Based on the interview and assessment of current income and debt, the counselor could either recommend a debt management program, or another solution which could be a personal loan, bankruptcy, or some other form of settlement.

The company should not promise any sort of quick fix or short-term solutions.

The National Foundation for Credit Counseling is responsible for certifying many of these counselors, who must complete a comprehensive training program certifying them to help and educate consumers regarding their finances.

Because most nonprofits are certified, it helps to read consumer reviews of these programs as well, to see how the company operates.

The next step is to check what services are offered and what fees will be charged, such as an initial sign-up fee and recurring monthly fee. Understanding the costs upfront is important, and can help someone avoid a possibly predatory, for-profit business.

Something else you may think to look out for: A settlement company may charge more fees initially on the promise to arrange a reduced lump sum payment of debts.

These companies often instruct  consumers to stop making payments entirely on their debt, which could affect credit rating and even may cause the creditor to send the debt to a collection agency. A legitimate program should offer financial advice and counseling on ways to help reduce debt.

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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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Village of New Paltz might expand eligibility for revolving loan fund | Local News

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NEW PALTZ, N.Y. — The village is considering expanding eligibility for a little-used revolving loan fund to include the needs of businesses being hit hard by the COVID-related economic slowdown.



Village of New Paltz trying to help residents get refunds from waste haulers

Village of New Paltz Mayor Tim Rogers




Mayor Tim Rogers said Tuesday that the $500,000 loan fund could be used to help businesses with more than just the purchase of personal protective equipment allowed under state and federal programs.

“We’re trying to piggyback off of the existing language for the revolving loan fund,” he said. “We just wanted to make it somewhat broad in terms of recognizing COVID impacts.”

One thing the village is considering is eliminating the rule that prohibits the use of the fund for emergency situations or business operations.

“Here we are flipping it and saying that you can,” Rogers said.

Guidelines for the loan program, which was established with funding from the U.S. Department of Housing and Urban Development, were last updated in 2013. The loan fund’s current interest rate is 3%.

Rogers said the fund has received only two loan applications over the past six years, and one of those was rejected.

“There’s only been one that we awarded and one that we straight up denied,” he said, noting that the rejection was because of the applicant’s bad credit history.

Rogers said the COVID-19 pandemic has created something of an economic irony in the village: decreased foot traffic in the business district but a significant increase in applications for building permits.

“[Village Safety Inspector] Cory Wirthmann believes our busy Building Department is partially a function of people traveling or vacationing less,” the mayor said. “ Money they would have spent is now going to home improvement wish list projects or just deferred maintenance, like finally choosing to replace the old roof.”

Comments about expanding the revolving loan fund should be emailed to  assistant@villageofnewpaltz.org. A loan application and information about the process can be found online at bit.ly/npaltz-loans.

For local coverage related to the coronavirus, go to bit.ly/DFCOVID19.

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Will Missing One Car Payment Hurt My Credit Score?

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The short answer is yes: skipping one car payment can hurt your credit score, but not until it hits a certain mark. One missed payment doesn’t destroy your credit score forever, but it can stay on your credit reports for years.

Missed Payments and Your Credit Score

One or two missed payments may not be enough to completely ruin a good credit score, but they can lower your credit score quite a bit. How much your credit score can drop depends on many things, including how much credit history you have and how much time has passed since your missed payment.

How much a missed payment can impact your credit score is heavily influenced by how many missed payments you currently have reported, your current credit score, your credit utilization, how many accounts you have, and more. In other words: your drop in credit score due to one missed car payment is likely to be unique to you. The drop in points could be anywhere from 10 to 100 points, or more.

Will Skipping One Car Payment Hurt My Credit Score?If you have a thin credit file or little to no credit history, one missed car payment can be devastating to your credit score. And, in some cases, having a good credit score and then a reported 30-day missed payment could hurt your credit score more because you have more to lose.

The severity of the missed payment matters too. If you’re 30 days on the payment, it’s not as bad as being 90 days late. Most creditors report missed payments in these timeframes: 30 days; 60 days; 90 days; 120 days; 150 days; and then delinquent/charge-offs after that. The longer you let that missed payment go on being missed, the worse it is for your credit score.

To bounce back from a missed auto loan payment, be sure to make that payment as quickly as you can. The sooner you make up that payment, the better off you are.

How Long Are Missed Car Payments Reported?

Missed and late car payments can remain on your credit reports for up to seven years. How much they damage your credit score lessens each year, but it can still impact your overall credit score years afterward.

Your payment history is the most influential part of your credit score: a whopping 35%. In terms of credit repair, this means making all of your bill payments on time is important. If you have an auto loan that isn’t currently being reported – meaning your loan and on-time payments don’t show up on your credit report – the missed and late payments are likely to be reported anyway. Even auto lenders that don’t generally report their loans to the credit bureaus typically report missed/late payments.

If you think you’re about to miss a payment and you want to avoid hurting your credit, you have some options to explore.

Ask Your Lender for a Deferment

Lending institutions understand that times can get tough. If you think you’re about to miss a payment, contact your lender right away and ask what options are available to you. Keep your lender in the loop if you’re going through rough times – the sooner you get ahold of them the better.

This is especially true right now, given the current pandemic. Many borrowers left without work have been forced to find alternatives to making payments and needed assistance with their car loans and mortgages. There is a process that allows borrowers to take a breather and gather themselves, and it’s called a deferment.

A deferment, in a nutshell, pushes the pause button on your auto loan. Most times, lenders pause the car payments for up to three months and add those payments to the back of the loan term. If you qualify, you may be able to recenter yourself and get back on track. After the deferment is up, the car payments resume and you continue paying as normal.

The only downsides to this option are that your interest charges continue to accrue, and your loan term is extended. However, in the grand scheme of things, a few more months of a car payment and interest charges is better than default or multiple missed payments!

There is a common stumbling block to deferments though: most lenders don’t approve these plans unless your current on the loan. If you’ve already missed one payment or more, then the lender isn’t likely to approve it.

Is Refinancing Your Auto Loan an Option?

If you’re struggling to keep up with your current car loan, refinancing for a lower monthly payment could be the answer.

Refinancing involves replacing your current loan with another one, typically with a different lender. Most borrowers refinance to lower their monthly payments by either lowering their interest rate or extending their loan term (sometimes both).

To refinance, you also need to be current on your auto loan. Most lenders that offer refinancing don’t consider borrowers with multiple missed/late payments on their car loan. Additionally, you generally need to meet these requirements for refinancing:

  • Must have equity in the car or the loan balance must be equal to the vehicle’s value
  • The car is under 10 years old with fewer than 100,000 miles
  • Your credit score has improved since the start of the loan

You may need to meet other requirements, depending on the lender you choose. Refinancing doesn’t typically require a “perfect” credit score, but you may need a good one to qualify.

Ready to Get a More Affordable Car?

If you’re struggling to make ends meet and worried about skipping payments, then it may be time to sell your car and get something more affordable. If you’re concerned that a poor credit score could get in the way of your next auto loan, then consider a subprime lender through a special finance dealership.

Subprime lenders are indirect lenders that are signed up with certain dealers. They assist borrowers in all sorts of unique credit circumstances, and they could help you get into a more affordable vehicle if you qualify.

Finding a subprime lender can be as simple as completing our free auto loan request form. Here at Auto Credit Express, we work to match borrowers to dealerships with bad credit lending resources in their local area, at no cost and with no obligation. Get started today!

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