Q. How do trailer foreclosures happen?
A. If the owner of a trailer stops making payments on the loan they received to buy it, they will face foreclosure. If they are unable to catch up in their payments or re-negotiate a new payment plan with the bank, they will either have to accept foreclosure of their trailer or they will need to pay their loan back completely.
Q. How can foreclosure be avoided?
A. Obviously staying current on payments means never facing foreclosure to begin with. Yet if the process has started, there is still the potential to work out an easier payment plan with the lender who may choose lower the interest rate or to increase the amount of payments. Sometimes an owner who is trying to avoid foreclosure can get the bank to accept a short sale, where the trailer is sold for less than what is still due on the loan. This way the bank gets money instead of having to repossess the trailer and sell it later on. Some borrowers choose bankruptcy, but this is usually the last choice after they have exhausted all their other options.
Q. Is it a good idea to buy foreclosed trailers?
A. After the trailer has been repoed by the bank, it will often be sold with other trailers and trailer auctions. Since new trailers typically lose a third of their value when they’re bought, used trailers are significantly cheaper. Ones that are repossessed can be even lower in price since the lenders are more interested in selling the trailer quickly rather than making a profit or even recouping all of the outstanding loan balance. Dealers frequently buy at bank repo auctions, so many used trailers were foreclosures once. It usually takes some work to find the auctions but the money you save on a much cheaper trailer makes it worth it. Both auctions and dealerships do provide quality trailers at great prices.