Can't make your car payment? Repo imminent? It's an OPPORTUNITY!

One of my long-time clients has a relative who can't make the car payment anymore.  Unemployed for a couple years (odd jobs occasionally) and other relatives have been helping with the payments, but they're running out of money too.

What to do?

There are alternatives to waiting for the repo guy.

You can SETTLE secured loans and KEEP the property (car) for a percentage of the loan, usually for between 10-50% of the loan amount.

How low the lender will go depends on many factors, obviously the value of the car, how much they expect to NET if they repo, the owner's employment, credit and assets determine the chances to recoup deficiencies and last, but not least, how badly the lender needs CASH.

In this particular case, the person really doesn't want to keep the car and they had already asked around to see if anyone else wants it.  No takers.

Here's something to consider -- the win - win - win - win deal:

Have a friend or relative buy the car for the amount of the settlement for RESALE.

Let's say the loan amount is $10,000, the car's resale value for a quick sale is $7,000.  The lender might net $3,000 if they repo -- MAYBE. 

Assume the lender accepts $3,000 to settle, the buyer resells for a QUICK profit for $6,000 -- almost doubled his money.

What's in it for the owner?

1) No collection calls, no harassment, no judgment.

2) Maybe the buyer is kind and shares some of the profits.  Maybe the owner (who obviously needs money) cleans up the car, makes it shine and helps with selling for a percentage.  People just have to work things out.

Potential problems:

1) If the car croaks before you sell it, you have a problem.

2) You have to wait for the title, can't just drive to the bank to trade the settlement check for the title.

3) Selling a car is work and there are costs involved. You have to advertise it, take the calls or answer emails, etc.

4) There are probably state laws requiring licensing if you sell more than a certain number of cars per year, but that wouldn't be an issue for a friend or relative.

I'm surprised I haven't seen a business of settling auto loans and selling the cars.  

But this is definitely an opportunity for people with some extra time needing extra money, find a buyer for the car.

The owner, the lender and the buyer and even the subsequent owner (if he gets a good deal) all win.  

The repo guy, wholesaler, car mover and used car dealer all lose out on business, not to mention the many people who to do paperwork for everybody, arranging sales, etc.

I'm not crying for them and this type of deal gets people paid -- just different people. YOU and your friends and relatives.

Make sure you RECORD all calls when negotiating (check your state law to see whether it's legal without telling them). Telling them that you're recording doesn't help with negotiations.  You have to keep excellent notes too and of course you need good negotiating skills.

It's nice that the owner isn't negotiating for himself and when the lender puts on pressure, he can simply state that he needs to ask the buyer.  The lender needs to be convinced that if the loan can't be settled, they'll have to repo.

Never negotiate on your OWN behalf.

And of course you need to finalize the deal in writing (by fax) including specifying how long it'll take to get the title and where they send it to.

There are MANY variations to this scenario.

The deal could be structured so the buyer becomes the new lender if the owner needs/wants to keep the car.  Of course the buyer might also want to keep the car for himself.

I hope to inspire a few people to SEE the opportunities. 

You could even negotiate a deal with the creditor if you don't have a buyer and then advertise the car so you can make a few dollars. 

As always, getting a deal from the lender works best when you're delinquent, your credit sucks and they know you're serious.