Repossession: The Official Rules and Regulation of Repossession
If you fall behind on your car payments, your auto loan lender can take back your vehicle in a process known as repossession. The lender doesn’t have to get the court’s permission to take back the car. They might not even have to give you an advanced notice of repossession. Anytime you default on your car payments, you’re at risk of having your vehicle repossessed.
How a Repossession Begins
Exactly when a repossession happens depends on the terms of your contract with the lender. The lender might be able to repossess your vehicle after your first delinquent payment or it may be some other time period like three or six months. Refer to your contract to find out when a repossession would happen for you. You may be able to keep your vehicle, even after becoming delinquent, if you work with the lender to come up with a plan to catch up on your payments.
After the Repossession
Once the lender takes back your vehicle, it’s sold or auctioned so the lender can recoup the amount you owe. If you vehicle is sold for less than the loan payoff amount, you’re responsible for paying the difference which is called a repossession deficiency. You’ll also have to pay back the lender’s cost of having the vehicle repossessed. The lender may allow you to pay off the deficiency and repossession over or a period of time or it may require you to pay it all at once. It’s in your best interest to work out a payment plan. Make sure you get any payment agreement in writing from the lender and don’t start making payments until you do.
Voluntary Repossession
You can save yourself the embarrassment of having the repo man take your car away by giving your vehicle to the lender voluntarily. This is known as voluntary repossession. The only benefit of a voluntary repossession is that you save the lender – and ultimately yourself – the cost of having to call a repo man to take the vehicle back. You may be able to use a voluntary repossession to negotiate a reduction in the deficiency (if there is one), but don’t be surprised if your lender isn’t willing to work with you.
How to Stop a Repossession
The easiest way to prevent a repossession is to stay current on all your vehicle payments. Contact your lender as soon as you notice you’ll have problems making your car payment. Your lender might reduce your payments for a couple of months while you regain your financial composure. You may be able to refinance your car loan into one with a lower interest rate, longer payment period or both. Shop around for refinance loans sooner rather than later.
Dealing With Wrongful Repossession
In an age where everything is digital, a wrongful repossession can happen with a slip of the finger. A wrongful repossession happens when your car is repossessed even though you haven’t defaulted on the terms of your contract. If your vehicle is wrongfully repossessed, try to work with your lender to get it back. When working with your lender is unsuccessful, you should contact an attorney to help you get your vehicle back along with any other damages you may have suffered.
Government Repossession Resources
Here are a few government resources that will give you helpful information about auto repossessions.
After the Repossession
Government Repossession Resources