What happens if I stop paying on a car loan and I've moved to Mexico?
I still owe on my car loan, but I recently moved to Mexico. I learned that once you're in Mexico, the lender can't repossess your vehicle. Will anything happen if I stop paying for my car loan?
“Sure, if you’re in Mexico, the lender certainly can’t repossess your car. But the collateral damage you’ll face if you ever return to the US could be catastrophic, and there are issues that may arise in the near future as well.
If you don’t pay your car loan, this will damage your credit extensively. If you are thinking of buying a home, you can probably forget about it for the next seven years.
And even if you keep paying for the registration and car insurance, the lender is still the lienholder, giving them legal rights to the car.
Furthermore, if your loan is written off by the lender, they’ll report it to the IRS as income at some point. That means you’re responsible for the income tax on that amount. So if you’re doing your taxes, don’t be shocked if you have a tax liability for thousands due to essentially stealing the car.
Lastly, it’s a question of ethics. You could escape debt by leaving the country, but think about your reputation. You wouldn’t steal from your mom, so why would you steal from someone who trusted you? Think long and hard about that.”
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Browse by topics
What others are asking
Who pays less for car insurance, and what can I take away from their life circumstances and decisions to secure the cheapest rates for myself?
Who pays the least for car insurance? Is there anything I can do to be like them and also pay less?
Mar 12, 2021
Why do I have to have car insurance in Michigan if I don’t drive? "
I live in Michigan with my parents and my driver’s license is registered to their address. I don't drive. My parents tried to remove me from their insurance to save money, but they were told that I would have to buy my own insurance instead. I can't afford insurance!
Jun 21, 2021