What Happens if You Default on a Loan That Isn't Being Reported to Your Credit Report

[Jennifer Billingsley]

My question involves collection proceedings in the State of: Utah

My boyfriend had purchased a car from a "Buy Here, Pay Here" type establishment. He's had the car since. Feb. 2011. His contract is till Feb. 2013. The car has had endless issues and is on it's last leg. We decided to investigate the idea of getting a different car for him, in hopes having the first loan paid off and rolled into the second. However, when we went to the dealership, they showed us that his car was not posting to his credit report. The salesman advised him to just take the old car back, and that it wouldn't hurt him if it's not reported. I didn't feel quite right about that, since to purchase the first car, I know he signed a loan agreement.

We went ahead and purchased a car for him, with me as the co-signer. He is planning on calling the other company and telling them to just come get the old car. My concern is that in investigating things today, I came to realize that the dealership he purchased his first car from is owned by lawyers. Obviously it's a company that takes advantage of people with bad credit, and has legal counsel to then take action if payment isn't made. I'm really worried right now, and wanted to see what advice I might find here. We for sure can't afford payments for both cars.

Also I remember my mother always telling me you have 72 hours to cancel any contract. Is this true? Since if so, and if he might be sued by the first company, we might need to take the new car back.

Any help is much appreciated.

[Mr. Knowitall]

If you choose to default on a loan, the creditor can report the default and repossession, even if they have not previously reported loan activity. If you don't pay off the balance of what you owe they can also seek a deficiency judgment against you, and that judgment will end up on your credit report.

You don't have 72 hours to back out of a car sale. The 72 hour rule applies only to unsolicited sales made in your own home (e.g., a guy shows up at your door, uninvited, to sell you a new roof or a vacuum cleaner.)