Repossession of a vehicle usually occurs right after a car loan default. Here’s how to know, or determine, if and when your car is eligible for trade-in.

Your lender may not notify you

How quickly repossession occurs and when it is completed depends on your auto loan agreement. Each state has its own rules about whether or not the lender is required to notify you before a repo. In many cases, the lender does not have to tell you that they are going to repossess the car, and they probably will not. However, a bank or lender may be required to notify you of certain things once the repossession process has begun.

Once the takeover process has started, the lender can hire a salvage company to recover your vehicle at any time and the location – they can even come to your property. The repo man can plug in your car from your driveway, while you’re at work, or if it’s parked in a public place. If your vehicle is in the open, it’s fair game.

One of the only places where a vehicle cannot be picked up is a locked garage. However, keeping your car under lock and key to “hide” it from the salvage company is a temporary (and questionable) solution to keeping it. If the salvage company can’t get to the car, the lender can go to court and try to get a replevin order, which is sort of a lawsuit. If the lender wins the lawsuit, you are forced to give up your car. Hiding your vehicle therefore only prolongs the repossession process.

Deposits start with the default

Most often, repossession occurs after your auto loan defaults. By default, a borrower has failed to repay a loan in accordance with the agreement. Since the vehicle is owned by the lender until you terminate the loan, the lender can repossess the car if you stop making payments or break part of the loan agreement.

Every loan agreement is different, so the recovery process could start after a missed payment on your car loan. Some dealers can even remotely deactivate your car as soon as you are late on a payment, then come and collect it.

Read your loan agreement carefully to find out what your lender’s repo process is and what happens if you break the agreement. You may be able to contact your lender by phone or email for clarification if needed. Talking to your lender before repossession is always a good first step.

Notifications you might receive during repossession

While a lender may not be required to let you know the exact time and location the salvage company will pick up your vehicle, you are likely to receive a few other notices.

  1. Possibility to heal / restore – This notice of defect may arrive shortly after the start of the process. It explains how and when you can make up for missed payments to stop a repossession, and how long you need to take action before the vehicle is sold. You can usually fix your repossession by buying or reinstating your car loan.
  2. Acceleration notice – A notice of default listing conditions to keep your car. If you receive an acceleration notice, it usually means that the lender requires that the entire loan balance be paid off at one time so that you can keep the vehicle.
  3. Post-resumption notice – Lenders are required to give you information on when and where the car will be sold after the repo. In the post-repossession notice, you are notified of the date and time of the vehicle auction or the lender’s intention to sell. You have the right to bid on the vehicle at auction.

Of these three notices, the post-repossession notice is the only one you need to get in all states. Depending on your contract and the state in which you live, you may or may not benefit from a possibility of recovery or an acceleration notice.

Can I stop a recovery after default?

You may be able to stop the repossession process if you act quickly enough. One of the best ways to stop a repo is to talk to your auto lender before you miss a payment. Many lenders offer deferral programs, which temporarily suspend payments.

Some lenders may be able to change the due date of your payments to make payments easier based on your schedule. However, your lender is not obligated to do anything. The sooner you talk to them, the better your chances of finding a solution.

It may be worth consider refinancing, which could allow you to lower your loan payments. Refinancing replaces your current loan agreement with another, and most borrowers do it to get a smaller car payment by lowering their interest rate or extending the term of the loan. However, most lenders don’t refinance overdue or defaulted auto loans, so act quickly if you know you’re about to miss a payment.

Obtain another vehicle after a repo

If you can’t avoid repossessing a vehicle, chances are you will need another form of transportation after it’s been collected. Many lenders may be reluctant to help borrowers with repossessions that are less than a year old. Some dealerships do not review credit reports to determine your eligibility for vehicle financing and could be an option after repo – resellers buy here pay here (BHPH). These car lots are generally known to skip credit checks and could be your ticket to another car within the first year of repossession.

BHPH resellers aren’t your only option, however. In some cases, especially if it has been a while since your vehicle was repossessed, a subprime lender may still be able to help. These lenders specialize in helping bad credit borrowers get into the cars they need.

Here has Auto Express Creditwe have links with bad credit dealers all over the country. Using our extensive nationwide network, we’ll find a reseller in your area at no cost and no obligation. Start now by completing our auto loan application form.


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