Every car owner’s nightmare is to get stuck with a trouble-prone vehicle. Can a dealer garnish your wages if you can’t afford to pay off the loan on a useless auto?
Dear Let’s Talk Credit,
Assuming it is legal to garnish wages in your state, your creditor must sue you in court for the balance due on your car loan. If the creditor wins in court, a judgment is issued for the amount of the debt, which could be executed to garnish wages. If you believe the dealership is predatory and it makes good on the threat to sue you in order to garnish your wages, you might consider contacting an attorney.
If you stop making payments on the vehicle you don’t want, the dealership would likely repossess it. It may be better for you to return the vehicle to the dealership if you cannot afford to make the payments. If you wait for it to be repossessed, the dealership will add all fees associated with the repossession to your loan balance.
If you return the car to the dealership, it is likely they will sell it to satisfy at least part of what you owe on the loan. However, the dealer can still sue you for the difference in the sale price of the car and the balance on your loan. Most dealers sell returned or repossessed vehicles at auction. They are not required to get the best price for the vehicle, but the sale must be “commercially reasonable” or you may be entitled to damages or a defense against the deficiency. It might be best to consult with an attorney on this issue.
I’m sorry you have had such a bad experience with your car. A good rule of thumb for future car purchases is to make at least a 10 percent down payment on any loan to purchase the car. This helps you avoid being upside down (owing more than the car is worth) in the loan. Also, stay away from add-ons such as extended warranties and credit insurance. These are designed to increase the dealership’s profit.
Let’s keep talking!