What Happens When Your Car Gets Repossessed?

Repossession can be a stressful and overwhelming experience for car owners who have fallen behind on their loan payments. Understanding the repossession process and your rights as a borrower can help you navigate this situation and potentially find a solution. In this article, we’ll explore what happens when your car gets repossessed and what you can do to protect your interests.

The Repossession Process

Technically, as soon as a credit account is delinquent, the lender can take action to repossess the property tied to the loan. In the case of a car loan, if you miss a payment, the bank could repossess the vehicle without notice. They can shift into gear as soon as you miss a payment.

However, the repossession process can vary depending on your lender, leasing company, and state laws. Some lenders may attempt to contact you and work out a payment plan before resorting to repossession, while others may move more quickly to seize the vehicle.

Your Rights During Repossession

During the repossession process, it’s important to be aware of your rights as a borrower. Lenders are generally not allowed to “breach the peace” when seizing your vehicle, which means they cannot use physical force, threaten to use force, or remove the car from a closed garage without your permission.

Additionally, lenders are required to follow specific legal processes, such as notifying you after the repossession and alerting you when they plan to sell the vehicle. It’s helpful to know your state’s laws to ensure your lender is following all the correct steps.

Recovering Your Vehicle

If your car has been repossessed, you may still have options to recover it. In some cases, you may be able to reinstate your loan by paying off your past-due payments and repossession expenses. Depending on your state’s laws, you may also be able to buy back the vehicle at a public auction or private sale by paying off the debt and repossession-related costs.

If you are unable to recover your vehicle, it’s important to understand that you may still owe money to the lender. The difference between what you owe on your contract and what the lender receives from selling the car is called a “deficiency balance.” This balance can be sent to collections or the lender may sue you for the remaining amount.