Can You Repo a Car in Canada? The Ins and Outs of Vehicle Repossession

In Canada, there are two main types of car repossession: involuntary and voluntary. Involuntary repossession occurs when you stop making your car loan payments, while voluntary repossession happens when you willingly surrender your vehicle to the lender. Understanding the repossession process and its consequences is crucial for any car owner.

Involuntary Repossession: When the Lender Takes Action

Involuntary repossession is the type of repossession that most people are familiar with. It happens when you fall behind on your car loan payments and the lender decides to take action. The process usually begins with a missed payment or two, which puts you in a state of delinquency.

Once you become delinquent, the lender will typically send you a notice informing you of the missed payments and giving you a chance to catch up. If you fail to make the necessary payments or reach an agreement with the lender, they may decide to repossess your vehicle.

The repossession process varies depending on your province. In some provinces, such as Alberta and British Columbia, lenders have the option to either repossess the vehicle or sue you for the outstanding debt. In Ontario, however, lenders have the right to both repossess the vehicle and sue you for the remaining balance.

Voluntary Repossession: A Proactive Approach

Voluntary repossession is a less common but still viable option for car owners who are struggling to make their payments. In this scenario, you recognize that you can no longer afford the car and decide to surrender it to the lender voluntarily.

Voluntary repossession can have several benefits, such as avoiding additional fees and maintaining a good relationship with the lender. However, it’s important to note that voluntary repossession will still have a negative impact on your credit score and may result in you still owing money to the lender if the car is sold for less than the outstanding balance.

Regardless of whether you face involuntary or voluntary repossession, it’s crucial to understand the consequences. A repossession can stay on your credit report for up to seven years, making it difficult to obtain future loans, mortgages, or even rental agreements.

If you’re facing the possibility of repossession, it’s best to communicate with your lender as soon as possible. Many lenders are willing to work with you to find a solution, such as a modified payment plan or temporary deferment. However, if you’ve already had your car repossessed, there are still options available to you.

In some cases, you may be able to get your car back by paying off the outstanding balance, including any fees and penalties. However, this can be a costly and time-consuming process, and the lender is not obligated to return the vehicle to you.

In conclusion, while repossession is a serious matter, it’s important to understand your rights and options. By staying informed and communicating with your lender, you can potentially avoid or mitigate the consequences of repossession.