If my car was repossessed and auctioned off for less than the remaining loan balance, amI liable for the difference?
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If my car was repossessed and auctioned off for less than the remaining loan balance, amI liable for the difference?
They say I’m responsible for the balance and now a collection agency is trying to make a deal. Do I have to pay?
Asked on October 25, 2010 under Bankruptcy Law, New Jersey
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
If you financed a car, you basically took out a loan. You are responsible for the full principal balance of the loan; for example, say that the car cost $20k and you put $2k down, financing $18k. Day 1, you'd be responsible for the full $18k. If by the time the car was repossessed, you'd paid $1k towards the principal, you still had $17k you owed. If the car was sold at auction for $13k (after certain costs they can take out), that leaves another $4k that you are responsible for. The lender can require you to pay it; and if you don't pay it, they could even sue you for the balance (and potentially, depending upon the terms of the agreement you'd signed when financing, for the costs of collections). So yes, you do have to pay the remaining balance due on the loan.
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