Topic: If you can't pay your mortgage or car lease can you bring keys? (Read 208 times)

A ton of people think if the car is taken back then the loan is done but thats not it.   In effect you defaulted and are a bad credit risk and the bank could do a number of things to recover the debt.  In most countries you wont goto jail for it unless fraud was involved in the application then it is possible [that is a criminal proceeding]. However for a house its quite probable you would be forced to declare bankruptcy.   Bankruptcy can end up with jail time also but so far as I know thats really only with malicious failure to pay, fraud.
  None of this is especially a theory, it happens fairly often if you read the newspapers its not so rare if you think how rough divorce proceedings get for example; google Boris Becker world class tennis player he just served a jail term for deceit in bankruptcy.    Bankruptcy is always a waking nightmare a real bad time, worst case some people I know couldn't get a job after that which is years long nightmare ending.

   For the car loan maybe you could get away with it to a limited extent but not really, depends on the amounts owed.   I guess most of the time the old car isnt worth so much at the point of default vs its sale price in recovery so you may just end up with awful credit ratings and tons of people have that problem.

Why are you asking us? There are so many different terms and agreements dreamed up by finance companies out there it's impossible to answer. You have to read the specific contract that you signed up and agreed to when taking out the car lease. Mortgages are also vastly different in scale but ultimately are likely to work the same way. There is often a gap between the amount that you agreed to pay overall and the amount that the car/house would be worth when you decide to abandon it, if that is even an option, then you would have to pay the difference. Failing in the extreme case of losing your house under mortgage would likely be the worst case scenario where you have declared bankruptcy and it has to be sold to cover outstanding debts.

my bad, its indeed a type, it should be 'if we cannot pay our car lease for 3 months straight'. thanks for the correction.

I don't understand. You mentioned that if someone can pay their car lease or mortgage for three consecutive months, their car can still be taken away. Is that really true, even if they can afford it? This seems like something that should be considered illegal. Or did you make a typo?

What country are you in? Here in the US I can walk in a surrender a car and toss them the keys. C'est la vi.

Here in the US they are never going to "send the cops". It's a civil matter.

If you are in the US, you shouldn't be offering advice.

I don't know in other countries, but from where I came from, if we cannot pay our car lease or mortgage for 3 months straight, the bank will take our car or house, but you need to remember that we already paid some of the installment, and we will not get that money back, so we definitely loss some money. And not only that will also reduce our credit score, and it will make us difficult to get another loan, mortgages, or car lease in the future.

And also the Bank will terrorize us with their collectors staff from the first month we miss our payment.

There is a legal procedure in that and you can't just go to the bank, return the keys, get a thank you in return, and get out of there. If the things you are returning are of less value than they initially were when you got them, you will need to pay the money that you owe to the bank and if you refuse to do that, expect the cops to visit you because they will report you for your behaviour and the debt that you are refusing to pay.

So, one should only take a home or car loan when they know they can pay the loan along with the interest set by the bank because if you fail to do that in the future, you might have to face legal consequences for that.

Lots of horrible advice in here.

The answer really depends on your situation.

Let's say you lose your job and the Biden economy has gone no lube on you, debts are mounting and soon you have a insurmountable mountain to climb.

If you can't make your car or house note it's going to look like a bankruptcy is in order, that's fine don't be afraid of it.

Get a lawyer.

Get a new bank quickly. Have your pay deposited, if someone wants to snag your cash they won't know where it is for awhile until this event is over. Credit Unions, big banks will sell you out.

Don't answer calls or transact over the phone, everything must be registered mail. This buys you time. Never do jack shit with a debt collector.

Do NOT cash out 401k to pay your debt, they can't touch it. It's your to keep. Do not pay one creditor and not the other. This can create an ugly claw back situation. Stop paying everyone at the same time.

Don't surrender anything it will take months and months for them take them after you have filed. Make them come get it.  Walking in and handing it over doesn't get you anything.

Don't lose any sleep screwing the banks, they signed up for the risk.

Returning keys to the mortgage bank will not be a good option if you cannot pay your debt. The mortgage firm will have to cost the worth of the house or car and if it is less than what you had paid, you might have to look for ways of balancing what you owe. In my location houses appreciate, so it will be a good option to sell the property and balance the mortgage bank what you owe. But I don't think I will ever consider buying a car on credit because the price deprecates, unlike houses. I don't know anyone who returned keys to mortgage bankers, however, most of the people I know forcefully lost their cars or houses because they failed to service their debt.

As a young who wants to own a house, it is difficult for me to wait 10 or 15 years to have enough money to buy a house when I can do so with a mortgage. There are some things that may require debt to pay for them, but you should not buy anything expensive. Instead of a house for 400 thousand dollars, buy an apartment for 100k and pay for it in 5 years.

People are the ones that go to banks asking for money and you can be sure that whenever they lend you anything they set the terms on their favor, so you cannot simply say you cannot pay anymore and give them back the asset you bought, they may appreciate the gesture as this saves them the time to do this on their own, but you are not free of your responsibilities and most likely you still owe them money that you need to pay immediately, otherwise you could face the banks taking legal action against you.

I think that idea is also very suitable, but from actions and religious norms, this is not commendable because you are not carrying out your responsibilities, but from an economic perspective you can be said to be smart, there are only two sides, you consider from what aspect.

I believe that banks must've figured out these scenarios where a person takes loan for house or a car lease and doesn't pay or stops the instalment payments along the way, perhaps the person drops keys as the OP said, they'll look into the circumstances to know why the customer acted how they did. I believe that the outcome of their investigation will determine how they'll plan to recover their money.

I'm not so knowledgeable about mortgages and car lease but I know that if a person takes loan from a bank and defaults payments, that the bank will do everything possible to recover their capital and interest, this is why they ask for collaterals and guarantors before giving out loans. If the borrower doesn't pay back the loan, they'll go after the collateral and the loan guarantors. Finally I know that they'll blacklist the person, so that he'll not be given a loan in another bank, until he settles his loan repayment with them.

Yes, like Franky said.... but there are also other costs involved. The car dealership paid out commission and also other admin cost (transfer and roadworthy) that inflated the cost of the sale. So the car is actually worth a lot less than the price that it was sold for to you. (If they take it back, you will get a lot less for it, even if you just drove around the block)

The same goes for the house... commission were paid to the real estate agent and you paid transfer duties and taxes on the sale. So, you will be stuck with a lot of debt, because the asset will not cover the amount that you borrowed from the Bank. 

There's bound to be a difference between the value of said keys vs the value the bank made you owe. It mostly comes from the interest value and depreciation of whatever asset your planning to surrender since there's probably going to be a re-evaluation of sorts if you do surrender whatever asset it is as part of payment for failing the mortgage.

I don't think such issues would normally happen though since banks would usually do a strict check with regards to the financial status of the person applying for a loan. At the very least, they probably considered already that you'd probably have ample alternatives, some may be on the extreme side if you do ever fail to pay. Maybe even adjust the plan so that you can accommodate it with what your current status is.

Sure you can hand back the keys but if you owe more than the house is worth then the bank will sue you for the difference in the future.

Generally houses gain value so you might have equity and returning the key is pointless since you can sell it yourself instead of getting bad credit.

Usually cars are a different story, they depreciate a lot in the first few years and usually when the bank repossess it, it might have damage and usually they go after the owner for the difference.

you need to pay interest first then we are talking, the thing with loan, there's interest that you need to pay, you can't just return back the key if you cant pay thats just not how that works.
even paying earlier than expected date you can get fined when it come to mortgage, you're definitely not gonna get off the loan by just simply returning back the key unless you're already paying good amount of the mortgage and the remaining loan you can pay by just returning back the key if the value surpass the remaining loan.
otherwise if you just try to return key and vanish, your credit score gonna be affected and you're probably still gonna get pursued to pay the remaining. but well im no expert in this thing, just speaking from my experience, trying to pay off all the loan earlier than expected timeline got me fined.

I dont think it works that way. If you're strapped for cash, it's best to talk to your lenders instead of just ditching the keys. They might have options or programs to help you out. Ignoring payments could make things worse so think that communication with the bank is crucial in these situations. They typically follow specific legal processes and it's important to engage with them to explore options or discuss your circumstances. Ignoring the issue may lead to more complications so open communication is key

Don't worry if you can't pay the car, they're the one that's going to you and pull the car that you can't pay. While for the house, obviously, they can't just bring it with them but they'll send you a notice and deadline and extensions if you ever talk to them.

That's not how the process for the bank taking possession of someone's property and car. If you can't pay them anymore, call the bank and let them do the thing.

It's not just going to be easy as what you're thinking of "take my keys and leave!".

However, the problem is that not everyone knows that they will fail as long as they are still able to struggle and hope for good results through their own efforts. Actually, I also agree with what you said that there is no need to pay anything if the potential for failure is greater than the potential for success, but everyone is born to struggle and should not even think about failure before struggling. Because money that is enjoyed until it runs out will not be of any use unless it is spent to create a business that can return more money to life.

It is far more complicated than you think! When you fail to pay your mortgage or car lease, it is not as simple as handing back your keys to the bank. It is a legal process which given banks want to avoid due to all the extra costs comes with it. Bank will sit with you first to understand your financial situation and if they are any hope of recovering that money, they will first offer you are payment plan. They will try to adjust panel interest on your loan. Taking back the property is not ideal for the bank. Because then they will have to sell it off to recover there money which again incur additional cost.

I had worked in a bank long back. Even though not in the similar department but I have seen how the collections work. You cannot just walk into your bank and hand over the keys.

If you are talking about banks, things won't work like that and banks don't give loans to someone who just vanishes like that is why the credit score system is in place, and even if you miss a single payment it will take a hit and even if you pay it back it will remaining for over 5 more years or so and you will be asked about that one missed payment whenever you need a loan for something else in the different bank as long as the financial entity operates in the same country.

If you feel like you can't able to afford the car, then find a good deal in the market and sell your car and pay back the remaining, if you wait until bank seize you have to pay further even after handing over your car.

What do I know that someone can face serious financial conditions in the future let me force them not able to meet up with their mortgage or car lease, I advise you always make sure that you are able to pay a mortgage for a house or car lease before you try to get one through that means.
The bank and companies in charge of these have already encountered numerous problems from clients they may have had in the past, so there is hardly any kind of scenario that they do not have a solution for. There must be charges for breaching the agreement between you and the bank.

its not as simple as just handing back the keys

when you sign up to a mortgage or lease, there's other things involved

EG imagine a house of $200k purchase value
you are not signing a house purchase of $200k
your signing a contract of 15 years paying back $200k + interest.

so if handing back keys and house went to foreclosure auction and sold for $140k because you couldnt maintain/repair
and you didnt pay mortgage so mortgage is upto $240k
you still owe $100k even after handing back keys

same goes for car.. and yep cars depreciate alot so expect to still owe when handing back car keys

If don't have money to pay your mortgage or car lease ?
Can you Simple bring keys to the bank ?
I mean you got to estimate your case If you know you gona fail anyways dont pay them nothing just enjoy the the money while you have it.
Do you know any one who returned keys just back?