A woman with brown hair is on the phone talking to somebody about her repossession

How the Repossession Process Works

Milad Hassibi May 1, 2018


One of the most stressful situations for anybody with bad credit in a hard financial situation is a repossession. Thankfully, there are numerous steps you can take to get your car back after a repossession has occurred.

First and Foremost

If you have been given multiple notices of repossession or are significantly behind on your auto loan payments, your first step should be to contact your lender.

Speak to a representative and tell them about your financial situation.

Lenders are interested in getting their money back and they will be open to working with you, especially if you have been able to make your payments on time in the past.

Repossessing a car is an expensive task, and lenders know that working with borrowers figure out a payment plan can remove the expense of a repossession.

If you’ve been notified that the repossession process has already begun, be proactive and see what A man with empty pockets and a suit is defaulting on his auto loan with a notice of default in yellowstage of repossession your car is in. Knowing how the repossession process works are key to understanding how you can get your car out of repossession status.

How Repossessions Work

Once you are delinquent on your auto loan, your lender may have the right to repossess that car. In some cases, you may have your car repossessed after 5 missed payments or after 1 missed payment.

Your lender will hire a towing company who will come and take your car. This towing company has the right to take your car from your home, your work, and almost anywhere else.

State laws vary when it comes to repossession law. Be sure to check online and see what your state of residency says about the rights you have as a borrower. Some states require notification of repossession and some don’t. However, know that there are some steps of repossession that require notification, regardless of state.

Your lender will usually provide you with the following notices if you are in the stages of repossession.

Notice of Default

This notice will inform you that you have defaulted on your auto loan payments. If this happens, you may also receive an “Acceleration Notice”, which tells you that you must pay the entire loan balance off to stop the repossession process. This amount will be the total outstanding balance of the loan including all fees. Some states make Acceleration Notices illegal.

Notice of Sale

If you decide not to pay off the full balance and your car gets repossessed, the lender will sell the car to the highest bidder in an auction setting. The lender is legally required to notify you that your car has been placed for sale.

The letter will contain details telling you when the car will be sold, who will sell the car, and contact information relating to the sale of the car. You must receive this notice within 10 days of the cars sale.

Get a Car Loan with Any Credit Along with a Happy Couple and a New Black SUV next to them

Deficient Balance

Once your car has been sold off, the lender will use the proceeds from the sale to cover the cost of the loan.

If the sale price of the car is not enough to meet the loan amount stated, the lender has the legal right to obtain the difference in price from you, the borrower.

If you decide not to pay off the remaining balance, the lender has the right to sue you in court.

After Repossession

Having a repossession on your credit report can be a red flag to conventional lenders. If you are in need of a car after repossession, there are a few options.

You can also go ahead and work with a Buy Here Pay Here dealership, a type of dealership that finances all auto loans in-house.

Although the cars offered at these dealerships are older with higher mileage, they may be the only options after a repossession.

Final Note

There is no doubt that a repossession can take a toll on your credit, and leave you without a reliable form of transportation. If you are in need of a car and are finding it difficult to find an auto loan, CrediReady can help. We have the largest database of dealers and lenders that work with good people in bad credit situations. Take a moment to fill out our free no-obligation form and get approved for the car you need today.



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