My question involves an auto loan or repossession in the State of: Arizona
I had 2 vehicles financed with a Federal Credit Union in Arizona. I was unable to continue paying on 1 vehicle so I voluntarily surrendered the vehicle back to the lender. The vehicle was auctioned and I now have a 22K deficiency with the lender for the difference in the loan and what it was auctioned for. They are telling me I have 2 options:
1) Take on a signature loan for the deficiency (22K) at the same interest rate I had on the vehicle (6.5%) for 60 months. This makes my monthly payment over 1/2 of what it was before and I can't afford that.
2) They will send the deficiency to a collection agency. In addition, even though the 2nd vehicle I have financed through them is current and I can afford to and have been continuing to make that payment, they said they will repossess that vehicle also. I advised them that the 2nd vehicle is also worth far less than it could be sold/auctioned for. They said it is their policy and the additional deficiency on the 2nd vehicle would also be written off and sent for collections.
I could see if the 2nd vehicle had equity this could possibly make sense, but with the 2nd vehicle having negative equity, I don't see how they can do this?
Looking for some help as to if this is possible and legal? If so, how often does it actually happen as opposed to just a threat to get me to take on a signature loan for the defiency?
Thanks in advance