Struggling to make ends meet between paychecks is stressful, and without the safety net of a savings account or other resources, the struggle can become quickly impossible with even the smallest change in circumstances. One such change might be the loss of a vehicle through repossession.
Your car could be repossessed if you can't make payments on the loan to the original lender. Even if you own your car outright, if you are in a serious financial situation and put it up as collateral to obtain a loan, you could find yourself in danger of repossession. This is especially true with some title loans, which can come with hefty interest rates. The Consumer Financial Protection Bureau says some short-term loans attached to vehicles have rates as high as 300 percent.
Whether you're trying to pay off a short-term loan or are struggling to make regular payments to your vehicle lender, you could face a risk of repossession. Some lenders will repossess a vehicle if you are only a few payments behind, and that can happen faster than you think. If your vehicle is repossessed, you might then face even greater financial challenges.
Without a vehicle, you might have to rely on others to get you to and from work. A lack of reliable transportation might make you an unreliable worker, putting your job -- and your income -- on the line. If you do lose your job, you could face an even greater financial crisis than the one you are dealing with now.
While it might seem like an unavoidable slope once you begin missing vehicle payments, you do have options. One of those options is bankruptcy, which puts an automatic stay in place so creditors cannot repossess your car or harass you for payments while you are in the bankruptcy process. Consider talking with a knowledgeable professional about your options now so you can keep your vehicle and work toward a more stable financial future.