How Lack of Car Insurance Can Lead to A Repo

If you watch TV or surf the internet at all, chances are you have seen one of the many commercials aimed at convincing consumers to compare rates for their car insurance. Everyone says that they have the best coverage for the best price, but some companies even offer rate comparisons at their expense to help you make the right decision. All of the geckos and Jackie-O-esque spokespersons can make one shy away from actually getting the quotes because of the constant bombardment of advertising. But what if the big corporations have a point?

My husband discovered a while back that maybe all of that pushing is actually a push in the right direction. He learned the hard way that not having affordable auto insurance can ultimately lead to getting your car repossessed. It sounds like a stretch, but it really happens, as it happened to my husband Lee once upon a time.

The story goes like this: Lee was performing a juggling act with his debts, and soon realized that he simply had more expenses than he had income. The automobile insurance he had on his SUV was too high for him to keep up with, so he let it lapse. His intentions were to catch up as soon as he could and stay off the road as much as possible until the situation was cleared up. Unfortunately, he didn’t get the opportunity to put his plan to the test. Midwestern-based ALF Insurance had a different plan in mind.

The insurance company reported to Lee's credit union that he was uninsured.

In a surprising but completely legal move, ALF Insurance gave LSI Credit Union the heads up on how Lee's insurance had lapsed, which took things from bad to worse. We all know that if a lending institution holding a lien finds that the borrower does not have proper insurance, they can slap their own expensive insurance plan on them without warning. LSI Credit Union did just that, and told Lee that if he didn’t want their sky high rates he should find his own insurance. Needless to say, that was easier said than done, not because the geckos and 60s receptionists weren’t there waiting with a quote, but because he couldn't afford what he had before, much less the new payment. Now the newly imposed car insurance was attached to Lee’s car note, which put the vehicle in jeopardy. He couldn’t manage to get a new policy and pay for the one that was now attached to his car loan. After months of struggling to make the new, inflated note, he had to submit to a voluntary repossession of his truck.

As a married guy with a pretty smart wife (if I must say so myself), Lee has grown from the experience and does a different juggling act these days. Instead of juggling debts, he is a bargain shopper, always with an ear to the ground on the best deals in commodities, food, retail items, and insurance, making 'the switch' whenever it is advantageous to do so. Considering the circus that is our current American marketplace, it's an act that's a lot more fun to watch.

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Dude Where's My Car?...Seriously

I woke up in a hurry knowing that I only had about 45 minutes to get ready. That's 45 minutes for my daughter and me to bath, dress, do our hair, eat, grab everything we needed and get out the door - not a second to waste or spare. We made it, but going towards the parking lot it took me a few seconds to realize that something was missing. I kept walking though because I was certain my eyes were playing tricks on me. Yet, when I reached our parking spot our truck definitely was not in it, nor was it anywhere else in the parking lot. Way to start the day.

My initial shock quickly turned to frustration once I realized what had happened. Our financing company (the powers hereby known as HSBC) had sent someone out to repo our truck, when just days before they were on the phone reassuring my husband that we would be in the clear as long as they got some kind of payment. I think back now and realize that when they were asking him to 'update' his information, they were actually confirming our address and then waited until the day he deployed to come out. So there I sat, husband having just left, a million things to do that day, no transportation, and certainly nowhere near the almost $3,000 I knew we owed on the note. Plus, I kept wondering how I was going to tell my husband that his prized Harley Davidson edition F150, that he had worked so hard for and loved more than me, was gone.

I had half a mind to let them keep it because we could never really afford the thing to begin with. I couldn't let it go though because they said there would be no repo if we could send a payment and make arrangements for the rest, which we did. I spend the rest of that first day making phone calls to see who had taken the truck, why, where it was and how much they would accept to at least get it back. It didn't really surprise me that I got the runaround and for some odd reason no one knew anything except that we owed them money. Day two was spent doing the same thing, this time with a little more success. The representative I was working with told me he could keep the truck from going up for auction, but the kicker was that I had to give him $2,000 and he could only guarantee the offer for two weeks. I thought that was outrageous since 1) they shouldn't have taken it to begin with after what they said and 2) if we could afford to give them that much then the note wouldn't be past due. Needless to say, day three was spent calling around and begging my family for money and luckily I was able to scrounge up what I needed. Day four, I called up the company and arranged for payment in hopes of having them release the vehicle back to me. Once this was done, they gave me the information for the impound lot and this is where the real fun began.

If you noticed, everything I just described took place over the course of about four days. The next day I went to the company that took the vehicle, paperwork in hand, thinking I was on the way to pick it up. Turns out that it wasn't there, and according to paperwork the company had on file it was transported to the auction lot in North Carolina two days after it arrived at their facility (we lived in Virginia at the time, about 4 hours away from where it was taken to). I don't think the word upset is enough to describe what I felt like at the time. After a verbal battle with the employees there, I was able to get about half of the contents of what was in the vehicle, information for the auction company, signed some papers and high-tailed it right back home to give a piece of my mind to Mr. HSBC representative. This guy assured me that the truck would be safe and kept from auctioning for two weeks, not knowing that while I was talking to him the first time, the vehicle was already on its way to another state. He proceeded to tell me that he had made me no promises and that my payment was good enough to keep the truck from actually being auctioned but not from being transported to the auction site. How much sense did that make, really? After some more time on the phone, he agreed to send over the necessary paperwork and it was up to me to and make sure all was well from there. By this time, it was the end of the business day so I had to wait yet another day.

First thing the following day, I called the auction company and went though the whole rigmarole to get the truck officially released and ready for pickup. To make a long story even longer, I was told that I had no authorization from the finance company to do anything and only the owner could come down and claim the vehicle (it was in my husband's name). So I had to contact the HSBC rep, once again, who had the nerve to tell me that he had NO IDEA that I had intentions to pick up the vehicle myself, which is why I didn't have any kind of authorization. I asked him how he figured I wasn't going to pick the vehicle up if I was the spouse of the owner, had paid him every dime we had, went through all that hassle and had previously informed him that the owner was away on a deployment. I shamefully admit that we argued about this for about 15 minutes before he transferred me to a supervisor at which point I just got off the phone. In the end, and after they received every piece of paperwork imaginable, had exhausted all their excuses and wasted enough time, I was able to get a friend of mine to take a road trip with me to go pick up the prize.

Here we are about a year later still struggling to keep up with these payments and wondering when they will strike again if we're even a day late. There's no convincing my husband to consider trading the truck for something more manageable because it's his and he's determined to get it paid off to show these people that he can. He financed it for about $28,000 and is paying $650/month with an interest rate well over 14.5%. No one will refinance with us for lower rates and payments, and no matter how much we pay it seems like the balance owed is always $2,000+. It's insane and there's no light at the end of this tunnel.

Cars and car loans are much more attainable these days, even with some bumps and bruises on your credit. A person could be denied for a $500 personal loan, but then turn around and get a $10-15K car loan (I can vouch for this from personal experience). This can be a positive advantage for those who really are in need but don't have the best credit record; yet it could also be a trap that causes people to dig themselves further into the hole with debt and no help or hope of getting out. The lessons to be learned here are always pay your bills on time, of course, but also never bite off more than you can chew. This way you stand less of a chance of running into a situation where you can't pay on something. When it comes to leasing and financing, always be aware of what you are getting yourself into by knowing and fully understanding the terms, rates, payments and any other important details and fine print.

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