Steps to take if you’re struggling with your car loan
Find out if your car is security for your loan
The first thing to do is find out whether your car is security for your loan. Check your loan contract or the national register (called the Personal Properties Securities Register).
If your car is security for your loan
Your car may be seized. If it’s a personal loan, a default notice must be sent giving you at least 30 days to pay your arrears before your car can be seized.
If your car is not security for the loan
Your lender can’t seize it unless they have a court order authorising the Sheriff to take it. This process can happen very quickly.
If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.
If you can’t afford to pay anything
Call us on 1800 007 007 straight away for advice.
Work out how much you still owe
If you’re not sure how much you owe, ask your lender.
Ask to speak to your lender’s financial hardship department
Contact your lender as soon as you can and speak with their financial hardship department.
Tell the lender you’re in financial hardship and negotiate a payment arrangement that you can afford. The lender has to reasonably consider your request. Read more about how to negotiate payment terms.
If they agree to an arrangement, ask for it to be confirmed in writing and stick to the arrangement.
If they don’t agree, you can apply to External Dispute Resolution.
Sell your car
Another option is to sell your car. This option might be appropriate if:
- you can no longer make any payments
- you don’t need your car for work
- you can use a less expensive form of travel, such as using a cheaper car, public transport or a bicycle.
It’s important to note that when you sell your car, you have certain obligations. You must:
- tell the person buying the car that it’s under finance; and
- get your lender’s permission to sell the car.
When a sale price is negotiated, tell your lender. If they’re happy with the arrangement, ask how they’d like the payment to be made to them. If the sale price is below what you owe the lender, you will still have to pay the remainder of the loan.
Give your car back to the lender to sell
You can give your car back to the lender voluntarily. If you do this, take photos of the car so you have proof of the condition it was in. You should also research the value of the car.
Your lender will then sell the car. If the sale price is under what you owe, you’ll have to pay the remainder of the loan.
Speak to one of our financial counsellors
If your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.
Can my car be repossessed?
Yes, cars bought on credit can be repossessed under certain circumstances:
- if you ‘defaulted’ on the loan agreement. For example, you failed to make repayments or failed to keep the car insured
- if you’ve been given a notice by the lender (required in most cases) stating that you’re in default of the loan, have had 30 days to fix the problem and you didn’t do so within that time.
If your lender threatens to repossess your car and/or your default notice has expired, lodge a complaint with an external dispute resolution scheme immediately. The lender can’t repossess your car while a dispute is being considered.
Can my car be taken without my consent?
If your lender threatens to repossess your car and/or your default notice has expired, lodge a complaint with an External Dispute Resolution scheme immediately. The lender can’t take your car while a dispute is being considered.
Your lender or repossession agent can’t repossess your car from private residential property without your written consent or a court order. You can refuse to sign the consent form and seek legal advice.
However, they can repossess your car without consent if it’s parked outside your property or your place of work.
If you find yourself in this situation contact us on 1800 007 007 and speak with one of our financial counsellors immediately.
What can I do after my car has been taken?
The lender must serve you a written notice within 14 days of the car’s repossession stating:
- the date the car was taken
- the estimated value of the car
- the enforcement expenses incurred to date and any other enforcement expenses accruing, such as the daily storage rate for the car
- a statement of your rights.
The lender can’t sell the car until 21 days after the date of the notice.
If you pay the arrears, the enforcement expenses and your normal repayment (if it is due during the notice period) the lender must return the car to you.
If the enforcement expenses claimed seem too high, check your contract and get advice from one of our financial counsellors on 1800 007 007.
If you can get back on track, but can’t pay the amounts required within the 21 days, you can apply for a hardship variation.
What happens when the lender sells my car?
If full payment isn’t made within 21 days, the lender must sell the car as soon as possible for the best price that is reasonably obtainable.
Once the car is sold, the lender must send you a notice stating:
- the amount the car sold for
- the net proceeds of the sale (being the amount the car sold for minus the lender’s expenses for arranging the sale)
- the amount required to pay out the loan
- any further recovery action to be taken by the lender against you.
When can the lender repossess my car?
Your lender or their repossession agent can’t repossess your car from private residential property without your written consent or a court order. You can refuse to sign the consent form and seek legal advice.
However, they can repossess your car without consent if it’s parked outside your property or at your place of work.
Your lender cannot repossess your car without a court order if the amount owing is less than 25% of the amount originally borrowed or $10,000, whichever is the lesser amount. For example, if you originally borrowed $25,000 and you currently owe $6000 this would be less than 25% of the amount of your original loan so your car (which is security for the loan) could not be repossessed without a court order.
If you are being threatened with having your car repossessed, contact us on 1800 007 007 and speak with one of our financial counsellors immediately.