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Can a car loan company garnish my wages?
I’ve struggled to repay my car loan the last few months, and my vehicle was repossessed a couple of weeks ago. I thought that was it and my loan was settled, but the lender sent me a letter saying I still owed money. I don’t have enough to cover the cost, so what happens now? Will a lender garnish your wages if you don’t pay the loan back?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear that the vehicle was repossessed. Repaying a
car loan
can certainly be challenging.If legal in your state, a car loan company can garnish your wages to cover the deficiency between the vehicle’s sale price and your outstanding loan balance. However, wage garnishment is typically a last resort because it requires the lender to sue and obtain a judgment against you.
Fortunately, if you can’t pay the deficiency out of pocket, many lenders prefer working with you to create a payment plan or negotiate a settlement rather than garnish your wages. So contact your lender right away.
Now that the vehicle has been repossessed, you may want to cancel your
car insurance
. However, if you have another vehicle on your account or need to maintain a policy, you should use Jerry
to ensure you aren’t overpaying.Jerry is an insurance comparison app that shops for low prices with over 50 different insurance companies for free. You will get quotes in seconds, can make changes at any time, and if you ever have any questions, agents are just a text away!
View full answer
- Gregory R.
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