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Following a vehicle repossession, you must contact the lender to discuss your options. You will need substantial money on-hand to get the vehicle back quickly. You will likely need enough money to pay off the loan or at least enough to bring the loan current and pay all fees.
What Happens After a Car Repossession?
After repossessing your vehicle, the lender may keep, sell, or auction it off to recover losses. The lender will send you a written notification containing important details.
The disclosure will explain how to claim any personal belongings and disclose any added recovery and storage fees. In most states, the lender must also disclose their intentions, such as the date and time of the auction.
You will have the opportunity to redeem the vehicle by paying off the balance in full along with any fees. Many states also allow a loan reinstatement option. Here, you typically pay the past-due amount plus any fees and restore the loan agreement.
The lender will apply the proceeds from the sale of the vehicle toward your balance owed. Often, the sales price is insufficient to cover the loan balance. This remaining amount is a deficiency balance, which the lender may legally pursue from you.
Credit score statistics suggest that you might endure a 100+ point decrease from the late payments and the repossession. And, this negative information remains on your credit report for seven years.
How To Get Back a Repossessed Car?
After repossession, the vehicle is usually stored for a period of days or weeks awaiting the sale date.
You will have the opportunity to retrieve any personal belongings. A written disclosure will outline any fees for towing and storage and explain your options for redeeming the vehicle before it sells.
Method 1 – Pay Off the Loan in Lump-Sum
Following a vehicle repossession, your options for getting the car back largely depend on your available funds. The process of redemption involves paying off the balance of the car loan in a lump sum.
Ask your lender for the total payoff amount. This will include any missed payments, the remaining loan balance, and the fees added, such as for towing and storage.
Redeeming the vehicle with a lump sum will get you back on the road. Yet, if you had ample cash in savings, it’s unlikely your vehicle would have found yourself facing a repossession.
Method 2 – Reinstate Your Loan
Another possible option for retrieving your car after a repossession is reinstating the loan. Keep in mind that not all states allow for a reinstatement option.
If applicable, your reinstatement rights are usually contained within your auto loan agreement. If you are considering a reinstatement, you should take swift action.
Many agreements allow only a very limited time for reinstatement. Contact your lender and request a written reinstatement summary.
The summary should explain the full amount needed for making the loan current. The reinstatement amount should include any past due amount, late fees, and repossession fees.
In some limited cases, lenders will also consider making a loan modification at this time. Making changes to the loan might benefit you and help prevent future problems. For example, they might extend the loan for an extra six months, which could allow for lower monthly payments.
Method 3 – Buy Your Vehicle at The Auction
After a vehicle repossession, your lender will send you some written documentation. Most lenders will take their repossessed vehicle to an auction and sell it to the highest bidder.
The lender should disclose most details about the upcoming auction such as the date and location. Keep in mind that the auction is often scheduled for only 10 to 15 days later.
Be sure that you pre-register for the auction if necessary. You would then appear at the vehicle auction and bid on your old car. Today, auto auctions might occur in-person or online (remote).
Many auctions have requirements that buyers make a deposit on any vehicle purchase on that day and the full payment soon thereafter. If you intend on financing your car, you must secure the loan in advance.
Following a repossession, you will likely struggle to qualify for a loan–meaning you would need cash. Consider using a credit score app to best assess your current status.
Remember that despite buying a car back at auction, you will still owe the remaining balance of your auto loan. This might include a deficiency balance that exists between the sale proceeds and the loan balance and repossession fees.
In recent years, new and used vehicle prices have skyrocketed. This means that Americans are borrowing more when financing vehicles.
Those experiencing a final setback might find themselves facing repossession very quickly. The consequences of a repossession are devastating to your credit and result in fees.
Being proactive by contacting your lender when problems start is a much better option than facing a repossession.
Can a Lender Sell a Car Without Giving a Notice?
In most states, lenders can begin the repossession process after only one missed monthly payment. Following a repossession, a lender may sell the vehicle, which represents the collateral.
According to the Federal Trade Commission, lenders must disclose their intentions. In most states, the lender will notify you in writing at least 10 days in advance.
You will likely have an opportunity to redeem the vehicle by paying off the loan balance with a lump sum. Most loan agreements also allow for the reinstatement of a loan by paying all past-due amounts and recovery fees.
How Much Will I Have to Pay After a Repossession?
When a borrower falls behind on their car loan payments, the lender may repossess the vehicle. The car is then usually sold, with the proceeds applied to the remaining loan balance and any late fees.
Often, the sales price is insufficient to cover the full remaining car loan balance. This disparity is a deficiency balance, which is still the borrower’s legal responsibility.
The lender may pursue a deficiency balance through appropriate legal means. Keep in mind that more expenses are also added to the repossession process.
These expenses include fees associated with towing, storage, and the auction. The combination of late fees, a deficiency balance, and any repossession expenses can really add up.
What If the Lender Sold the Car Without Giving You Notice?
The process of vehicle repossession is largely dictated based on the state’s laws. This includes what constitutes a loan default, rules about fees, and disclosure requirements.
Most loan agreements will contain provisions regarding the repossession process. In particular, it is the borrower’s right to either redeem their car with a lump sum or reinstate their loan agreement.
Also, lenders usually must disclose the details of their intent to sell the car. For example, Ohio laws require a Notice of Sale. If they intend to sell the car privately, they must disclose the date.
If they intend to sell via auction, they must furnish the location, date, and time. If a lender breached their obligations, you might have recourse and should contact the state’s attorney general.
What Is the Cost to Get Your Repossessed Car Back?
The costs involved with getting a repossessed vehicle back might vary. The three primary options include redeeming the car, reinstating the loan, or buying the vehicle from an auction.
To redeem the car, you must pay a lump sum that covers the loan balance, any late fees, and the repossession expenses. For reinstatement, you must pay the past due amounts, any late fees, and the repossession expenses.
Even if you purchase the car back from the auction you will still owe any deficiency balance on the loan and applicable fees and expenses.
- How Long Does a Repo Stay on Your Credit?
- My Car Was Repossessed. What Happens Next?
- How To Fix Credit After a Car Repossession
- Writing a Sample Letter to Remove Repossession From Credit Report
Anthony Amodeo is a regular finance writer in both business-to-business and business-to-consumer industries. Particular areas of focus include personal finance, small business, real estate, and more. He is a graduate of Kent State University. His credit scores are top tier.