What happens if you default on an SBA loan?

What happens when the car loan is in default, but the bank doesn't want the car?

• My (then 18 yr old) daughter bought a car from a dealership 5 years ago. Within the first year the car stopped running and so she stopped making payments. Come to find out, the dealership falsified her income and she never should have qualififed for the car. They also changed the original purchase contract when they were trying to finance her. The bank that finally gave her the loan has not tried to reposess the car. They have turned her over to a collection agnecy. She has tried to contact the bank to pick up the car and gets no reponse. The car dealership is out of business and under investigation for unscrupulous business practices. The registration is not current and it a has not been registered or driven in 4 years. DMV wants her to pay back registration and has garnished her wages. Since she doesnt have the pink slip she cannot sell the car. How can she get rid of the car. She would like to make a deal with the bank to keep the car and have it repaired if they won't come get it, but doesn't know who to contact. What are her options?"

• Answer:

  She signed the loan contract with a bank. Just because the car stopped running, doen't mean she does not still owe the bank the money. There are three parties to the sale of the car, and each must live up to their contractual agreement. The bank doesn't want to car because they are not in the car business. Your daughter doesn't want the car because it doesn't run. BUT! The bank made a good faith agreement with your daughter that she would pay them back, and your daughter agreed to it. It's HER name on the car loan. She either pays off the car loan, or her credit rating will be ruined. Your daughter's 18 year old judgment was lacking in the knowledge of cars, AND bank loans.