what would happen if your car loan company shut down?
okay so hypothetical scenario, lets say you got financed a car through a sketchy financial institution and said institution who holds the lien on the vehicle ends up going out of business. what happens to your car? do you become the owner by some sort of technicality?
- Anonymous1 month ago
No, their loans are bought up by another company, and you deal with them from that point forward.
- BortLv 61 month ago
This has happened at times where a financial institution that has current loan contracts has gone out of business for some reason or another. It happened in 2008. What happens to the still-active loans is they go up for sale, another lender buys it/them and takes over receiving the payments or the FDIC steps in and assigns the debt to a financial institution (a bank or some other lending entity).
What happens for or to the person who received the loan is their payments and responsibility to make their payments doesn't change.
When a person receives a loan it's under a contract agreement. The contract doesn't change. Whoever / whatever buys the loan also buys and becomes the other party in the contract agreement, the lender in this case. The agreement is a contract so nothing changes for the person who received the loan other than who they submit payments to.
The payments and APR and all of that stuff is contracted so that all stays the same.
- MayLv 51 month ago
Okay so. The loan will be assigned by the banking commission to another finance company. Okay so, You still have to pay. Okay so.
- Anonymous1 month ago
Nope, you are not that lucky. They sold all the loans before they closed or all the loans got acquired by another company.
Remember there is still a lien on your car title. Until someone puts his John Hancock and company stamp on the lien, the car is not yours. You cannot sell it. You cannot even junk it.
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- regeruggedLv 71 month ago
The loan is considered an asset of the loan company. In bankruptcy assets get sold. Someone buys the loan and you pay the someone.
- Robert B.Lv 61 month ago
They will sell the loan to some other company.
- yLv 71 month ago
The loan is sold off to another loan or financial institution. The catch is sometimes there is a delay in payments/billing. So the individual thinks they get a month or two off or something, but when it starts back up. They want everything owed to date.
- Spiny NormanLv 71 month ago
The lawyers for the finance company would take over debt.
- BarryLv 41 month ago
Failed finance firms are usually taken over by others. If this doesn't happen you could benefit.
- .Lv 71 month ago
I imagine they would sell the loan to another servicing company. I don't think you would get the car for free -- unless it was almost paid off. For example, if you owe just one more payment, the cost/time involved with transferring your loan may be too much to make it worthwhile.