Vehicle Repossession: What Happens When Your Car Is Repossessed?
If your car is at risk of repossession, check out the information below. There are a few ways that you could end up in the situation of a vehicle repossession, but it isn’t the end of the world. Having a car, truck, or SUV reposessed is definatly a con of leasing a car, but here are some tips to get back on your feet.
What are the consequences of having your vehicle repossessed?
According to the Federal Trade Commission, there is a lot of information available if you have found yourself in the midst of a vehicle repossession. If you happen to be in a state where a lender can repossess the car right away, this can happen almost immediately after defaulting on a loan or lease. This means that the owner can send someone onto your property without notice to repossess the vehicle.
In some states, the lender has more rights to get the car back. The FTC says this “includes using physical force, threatening to use force, or even removing your car from a closed garage without your permission.” After that, the lender can either keep the vehicle to cover the debt or sell it. In some states, the lender has to tell you what the plan is.
If the car goes up for sale at an auction, some states require the company to let you know. You are entitled to go to the auction and bid on the car to get it back. Sometimes you can buy the vehicle back by paying the full amount owed. This means paying back the amount owed, costs related to the repossession, and anything else associated with the repossession.
Try talking to your lender if you are at risk for vehicle repossession
If you are running into trouble making your car payments, try speaking with your lender right away. Most lenders will work with the customer if it is a temporary situation to avoid vehicle repossession. If you think you will be able to pay in the near future, the company might allow you to do that. Some will allow you to change the date or the payment or update the schedule of payments.
I”f you can reach an agreement to change your original contract, get it in writing to avoid questions later.”
Federal Trade Commission: Consumer Information
If you do get the lender agree to new terms, get the contract in writing right away. If you run into problems later, this will help you back up the story. In some cases, you might be able to do a “voluntary repossession.” In some cases, this can result in fewer fees owed. Even if you voluntarily return the car, you still owe the delinquent amount. This will still show up on your credit report if the lender decides to go that route.
Some tips to avoid being involved in this situation
If you are falling behind on your car payments and are facing a vehicle reposession, here are a few tips. Credit Karma says first tip is to talk it out as mentioned before. If that doesn’t work, try to sell the car. If the vehicle is worth more than you owe on the remaining auto loan, this could help you avoid reposession. You can pay off the remaining debt before that happens. However, be aware that if it sells for less than you owe, you still owe the rest of the money.
You can also try to beat the company to it. Hand over the vehicle to the lender and voluntarily return the car before it is reposessed. This is sometimes called a voluntary repossession or voluntary surrender. This still hurts your credit, but not nearly as much. It could also show future lenders that you are making more responsible choices.
When you go to get your next car, try buying something used without getting a loan. If you can pay with cash, you won’t have to worry about the bank repossesing the car. Plus, a used car is usually more affordable. If that isn’t an option, you can always use public transporation or walk for a short period of time. Depending on where you live, there could be reasonable public transporatio.
If you find youself in the situation of vehicle reposession, it isn’t the end of the world. Your credit might take a hit for a bit but it is only temporary. You can always come back from it and get your credit back in good shape.
