If you cannot make your payments on time, your creditors may make an effort to reclaim the vehicle you used to secure the loan. If you are on the verge of having your vehicle repossessed, your initial reaction may be to try to conceal it from the person who will be taking it from you. The reasoning that underpins this is not overly complicated: if they can’t find it, then they can’t reclaim ownership of it. However, the likelihood of this strategy being successful is low, and there is a high likelihood that it will make the situation even more difficult to deal with.
When Is It Possible for a Repossession to Take Place?
After you have fallen behind on your loan payments, the creditor in most states has the right to reclaim the vehicle as payment in full. The circumstances under which a loan is considered to default can vary from one loan to another, but default may occur as soon as the account is overdue by 30 days. Examine the terms of your contract to determine the point at which your loan is considered to be in default.
In all likelihood, the process of repossession will not take place so rapidly, given the circumstances. It is in the best interests of the creditors for you to bring the account up to date. Therefore, it is unlikely that they will go to the extreme measure of repossessing a vehicle after only one missed payment. It is less likely that the lender will try to reclaim their collateral if they are able to communicate with the borrower and see that the borrower is making an effort to bring the account current. This is where one should use common sense. The vehicle is less important to the lender than the money you owe them.
On the other hand, if you continue to fall further behind on your payments while at the same time the lender is unable to contact you, the likelihood of repossession increases significantly.
Disguising Your Automobile
In the majority of states, repossession agents are permitted to enter your property to seize your vehicle so long as they do not disturb the peace. This indicates that they are permitted to enter your property in order to seize the vehicle; however, they are not permitted to use any physical force or make any threats, nor are they permitted to break into a locked garage or any other storage facility.
Your creditors may charge you for the cost of reclaiming your vehicle if they choose to do so. If you make it more difficult for them, they will have to spend more money overall, which means it will cost you more if you want to keep your vehicle.
Therefore, if you lock your car in your garage, you can delay the process of repossession for some time. However, your creditors will eventually take legal action against you in the form of replevin, which means they will seek a court order compelling you to hand over the vehicle.
The specifics for replevin orders will vary from state to state, but you can’t hide the car for an extended period. It is not reasonable for you to anticipate that you will be able to conceal the vehicle for a protracted period of time without the creditor taking other steps to collect the debt. If you have been served with an order of replevin, then your refusal to turn over the car is considered a violation of the court order and not just a refusal to cooperate with the repo man. A repo man can bring a law enforcement officer to your property to enforce the court’s wishes in the event that they have a court order in their possession.
After taking back possession
After taking possession of your vehicle and getting it ready for sale, lenders will typically sell it and use the proceeds to pay down any remaining balance as well as any fees associated with taking possession of the vehicle and getting it ready for sale. You are still going to be responsible for the balance that is outstanding.
Even though the regulations in each state are distinct from one another, the majority of the time, it is the duty of the lender to inform you of the time and place where the vehicle will be put up for auction. If it was a private sale, the person selling it to you is obligated to let you know when they purchased the item. If you could also consider whether or not the price is reasonable from a commercial point of view, that would be ideal. This indicates that the price the lender is willing to accept for the vehicle should be comparable to the prices obtained by comparable vehicles when the circumstances are the same. If you are concerned that your lender did not get enough money for a repossessed vehicle, it is in your best interest to speak with an attorney about the situation.
Suppose you have an outstanding balance on your vehicle loan and pay any applicable fees associated with the repossession. In that case, you may be able to get your vehicle back after it has been repossessed if you live in certain areas. Your loan contract will be reinstated in this scenario, and you will continue to be bound by the same terms.
Cooperation With Your Lending Institution
If you are having difficulty meeting your debt responsibilities, your creditors would much rather work together to find a solution than spend the money and effort necessary to go after you and your vehicle. In your best interest, inquire with your creditor about the possibility of skipping a payment if you are experiencing a temporary monetary emergency. Customers of certain financial institutions, such as banks and credit unions, who have an exceptional track record of credit are granted access to this service on an automatic basis. Others may be willing to let you skip a payment as long as you approach them in a timely manner and ensure that your account is paid in full when you make the request. You will be exempt from making a payment for the following month if you proceed in this manner. However, interest will still be added to your balance if you do so.
If you are experiencing a more significant financial emergency, it is highly likely that you will have to make an effort to sell the car. In a perfect world, the price of the sale would be sufficient to pay off the remaining balance of the car loan. In that case, you will be responsible for locating the funds necessary to cover the remaining balance. You might be able to get a loan to cover the difference if you are proactive enough and take care of the problem before it has an adverse effect on your credit.
Suppose you are already behind on your payments but think you will be able to get caught up. In that case, it is likely that your lender will work with you as long as you keep in communication with them and demonstrate an ability to reduce the amount of the balance that is past due. If you are making progress, lenders will typically be much more interested in working with you rather than trying to repossess the vehicle. This is especially true if you have a good credit history.
Frequently Asked Questions (FAQs)
What kind of impact does having your car repossessed have on your credit report?
If you are constantly late with your payments, this will have a negative impact on your credit score. In the event that your vehicle is eventually repossessed, a loan default will also appear on your credit report. If you continue to owe money on the car after it has been repossessed and you do not pay the debt, the lender may file a lawsuit against you in order to obtain a judgment against you. Your credit report may contain a record of the event for up to seven years after it occurred.
Are you able to return your vehicle to the financial institution?
Yes. It is possible that you and the person who lent you the money can come to an arrangement where you return the car and are not required to make any further payments on it. It is possible that it will not damage your credit as severely as a repossession would, but it will still have an impact on your score. A “voluntary repossession” or “voluntary surrender” is the term used to describe this scenario.
What will happen to your personal belongings if the vehicle in which they are stored is repossessed?
When your vehicle is repossessed, you have the legal right to retrieve any personal items left inside of it. It is against the law for the lender to keep those things.