Little Known Facts About Car Repossession


There are rules lenders must follow when performing repossession – and you have certain responsibilities as well. The repo process can get complicated, so it’s important to know what’s fair and what your rights are.

Things to know about repossession

Each state has its own repossession rules and regulations. In many states, a lender can repossess a vehicle without telling you the time or location, and even remove the car from your driveway. Many borrowers believe their car is safe on their property, but unless it’s locked, it can be towed by a salvage company in most cases.

However, according to the legal site, a pension company cannot “break the peace” by taking your car. This can include towing your car while you’re at it, using law enforcement to help you pick up the vehicle, or breaking / unlocking locks or destroying property in an attempt to gain access to a car.

Here are seven little-known facts about car repossession:

  1. You have agreed to a repossession process – Signing an auto loan contract almost always means agreeing to allow the lender to repossess the vehicle if you don’t pay or otherwise break the contract.
  2. Your car may be repo’d for lack of insurance – If you remove auto insurance from your vehicle or reduce your coverage below the lender’s requirements, the lender can repossess the car. A lender can also set up a forced auto insurance plan and add the payments to your auto loan payment if you drop the coverage.
  3. A lender can get a court order – If you are able to get your vehicle away from the salvage company, or if the salvage company is unable to tow it, your lender can likely get a court order.
  4. You can voluntarily return your car – If you know your lender is about to repossess the vehicle, you can choose to return it yourself. It can save you money and make the process less complicated.
  5. Repossession scars last on your credit – A repo can hurt your credit score for up to seven years. The first year after repossession, it can be difficult for you to get approval for another car loan from most car lenders. However, over time the impact of the repo diminishes and you can usually refinance after a year.
  6. Military borrowers – According to, if you are on military service, a creditor must get a court order before you can repossess your vehicle. For this to be legitimate, you must have paid at least one car payment and signed the loan agreement before you entered the military.
  7. Auto lenders can’t keep your belongings – After repossessing a car, you have the right to collect your belongings in the vehicle. The creditor or the collection company is not allowed to keep or attempt to sell your personal property. If any of your belongings are missing or lost after the car is dropped off, you may be able to counterclaim for damages.

Repossession is serious business and can dramatically lower your credit score. If you think your car is about to repo, immediately contact your lender about your options if you want to keep your vehicle.

What happens after a repossession?

After repossession, the car is usually stored until it is put up for auction. Auto lenders typically sell repo vehicles in order to cover your loan balance. You also have the right to attend the auction and try to collect your car, if you wish. The lender is required to inform you of the time and place of the auction if it takes place.

If the vehicle is sold and you did not win the auction, the proceeds from the sale are applied to your loan balance. Any remaining balance, called a deficit balance, is your responsibility. The lender also usually adds the cost of hiring a recovery company and storage fees to your deficit balance.

Can I get another car after a repo?

There are dealers who can help borrowers repossess their credit reports. For at least a year, you may need to buy a car from a dealership to buy here, as they often skip credit. Other bad credit auto lenders, such as subprime lenders with special financing dealerships, may be able to help you with a car loan after a year after repossession.

Here has Auto Express Credit, we’ve been dedicated to helping bad credit borrowers on their car buying journey for over 20 years. Using our nationwide network of specialty finance dealers, we connect borrowers with dealers in their area. Fill out our free auto loan application form and we’ll find a dealer who can help you with your credit problems.

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