Ops! I can't pay the car loan?!

I was following on the newspaper report on the ex-water polo champ who was jailed due to embezzlment of $61K from a sports association. The report today said that most of these money went towards paying his car loans (2 cars).

Professionally, I have observed many people gotten their debt out of control due to car loan, and do not know what to do until the lender comments legal actions which led to embarrassment or compromise of integrity by using "other people's money" to solve the problem. The latter carries a jail term in Singapore. Here is what you can do if you are having problem with your car loan(s).

Step 1: Confess your problem to your God almighty.

Whatever faith you belong to, go kneel down to your God almighty and confess that you have made a mistake in buying the car which you can't afford. Confess that you have bought the car because you want to look good and keep up with the Joneses.

Step 2: Call the credit department of your lender.

After confessing, you would find it easier to put your ego aside and speak to the credit officer. Be sincere and polite, tell the officer that you want to surrender your car. The officer will advice you to drive to a specific car park to hand over the car. Some of these car parks are located at Turf club or behind Chinese Garden.

This is to avoid your car being towed away by the car recovery companies, which will charge you the tow charges and service fee.

Step 3: The lender will auction your car

Under the hire and purchase act, the lender has to do this professionally. It will call for buyer or auction the car away. Before the deal is sealed, it will write to you to inform you the selling price, you have the right to object if you are not happy. (But at this this stage of the game, i suggest you withhold your ego and let the lender off-load the car, becuase for everyday the car stays in the car park, you will need to pay the parking charges which is not cheap.)

Step 4: The poceed of the sale will be used to off-set the outstanding loan

In most cases, the proceed will not be enough to discharge the totel loan. You will be given a letter of demand to settle the outstanding amount. Based on this letter of demand, you propose an installment plan to settle the amount. (the lender would most likely to agree because all it wanted is to have the money back) Face the problem fast, and avoid letting in become a legal case which will cost you more money (legal cost are in thousands of dollars).

Step 5: Have discipline in repayment.

You have to honour your repayment schedule. And when you have more cash, go and make full or partial capital settlement.

Above steps are not found in text book, they are real experience from real people whom i have known. The cost of going through above steps is a loss of face, and (if you are a married man) a scolding from your wife, which after a while nobody cares. You can recover all over easily.

Coming back to the ex-water polo champ case, the cost of compromising your integrity to use "other people's money" to solve your problem is not only the jail term, but, more importantly, losing your soul, which is very very very difficult to recover.