What Happens When an Auto Loan Matures With Monies Owed?

The maturity date of your car loan is the day on which your final payment is due to be made. If, having paid your final installment, you still owe money on your account, it's likely that either your lender has made an error or you have failed to keep your account in good order. Either way, action will be required on your part.

TL;DR (Too Long; Didn't Read)

If your car loan is about to end, yet you still owe money, you'll need to pay the remaining balance in full before the lender will release the vehicle's title.

Review Your Payment History

If you've missed payments or paid your car loan late on occasion, your lender should have contacted you about this. As such, you should be aware of any residual amount that will be outstanding when your loan matures if you haven't paid any arrears or fees to date. Go through your bank statements if you're confident you have paid all your car loan installments in a timely manner. You may need to supply evidence of payments you've made if your lender has no record of receiving them.

Check for Arrears

Any arrears on your account will be added onto the end of your loan if you haven't cleared them. Unpaid arrears will also accumulate extra interest you will need to pay when your loan matures. A residual amount of interest may remain on your account if you paid past arrears late but have failed to account for any additional interest charges incurred.

Look for Fees

Monies owed on maturity of your car loan could partly consist of late penalties your creditor charged you for missing a payment at any time over the life of your loan. Some lenders will ask you to clear these fines when they're issued, but others will add them onto end of your loan where they will typically accumulate interest.

Consider the Consequences

The fact that you still owe money on maturity of your auto loan indicates that your lender will have reported any late payments you made to the credit bureaus. As your loan is secured by your car, your creditor will be legally able to repossess your vehicle if you fail to clear any outstanding amount at the end of your loan term. If for any reason your car is deemed not to cover the monies owed on repossession, you will still be liable for any shortfall.

Take Action

Contact your lender as soon as you realize there will be money left to pay on your auto loan after it has matured. If you were not aware that your account had slipped into arrears or accumulated fees, ask your loan provider why you were not informed of any problems and get an explanation as to exactly how and why this has happened. Arrange to make a payment to clear any outstanding amount due immediately once you've established there has been no mistake on your lender's part. Arrange to pay in installments if you can't clear your arrears with one payment.

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