A woman getting her car repossessed by a tow company

5 Ways to Stop Repossession Efforts

Milad Hassibi March 4, 2019

If you are behind on your auto loan, you may be worried that your lender is coming to repossess your car. Repossessions can make like much more difficult by taking away your vehicle while leaving your credit in a complete mess.

Here, we discuss how consumers can take the first steps to avoid repossession from their lender.

Reinstating the Loan

Even if you are far behind payments, you may have the right to reinstate your auto loan. If you are able to reinstate the loan, you can prevent the repossession all together or get your car back if it has already been repossessed by your creditor.

A tow truck tries to tow in a white car

When you reinstate the loan, you bring your loan up-to-date by making up and paying for all past-due payments and penalties. A lender will usually require this in a lump-sum amount. However, you must check your individual contract to see if you have the right to reinstate your loan.

Redeeming Your Car

After your vehicle has been repossessed, you have the right to redemption. This means that if you are able to pay off the entire balance of the car loan, you may get your car back. The redemption amount or “payoff” amount usually includes the entire loan balance along with all applicable fees and penalties.

Consumers are required to act quickly in redemption since once the car is resold, redemption is not possible. Redemption is also expensive, as the consumer is essentially asked to pay for the whole car in one lump-sum.

Negotiating With Your Creditors

There are a few ways you and your creditor can negotiate alternatives to get your car back or lower the amount of debt. Some options available to consumers include:

Selling the Car Yourself – When your car is repossessed, it is sold at auction, usually to a dealer, for far below market value. This grants the lender the legal right to take you to court for the difference between the final sale price at auction and the loan amount they provided for you.

Surrender Your Car – If you really must get out of an auto loan, you can surrender the car to the creditor. The incentive for your creditor is the time and money savings from not having to repossess your car. Consumers should ensure they have an agreement in writing before officially surrendering the car over.


One way to avoid repossession is to refinance your auto loan. However, often times, a consumer must have a higher credit score now than when they took out the loan in order to qualify for an auto loan refinance.

A creditor will usually decide to extend the loan term to lower payments. However, this increases overall interest expense drastically throughout the life of the loan.


Filing for bankruptcy, whether Chapter 7 or Chapter 13, is a great way to enable an “automatic stay”, which is a notification sent to all your listed creditors by your attorney notifying them that they are no longer allowed to contact you do to bankruptcy protection. If a creditor tries to contact you during this period, call your attorney right away.

Final Note

All in all, avoiding repossession can be a difficult feat for many Americans. However, taking initiative and working out a way to avoid repossession can help prevent your credit from being destroyed. If you are also in need of a new car and have bad credit, CrediReady can help.

Take a moment to fill out our 100% free no obligation loan inquiry form to get matched to our verified auto lenders eager to approve you!

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