What Happens If Your Car Is Up for Repo?

If your car is up for repo, you have probably missed one or two payments, which is all it takes for a lender to authorize a repossession. When this happens, contact your lender as soon as possible and explain your situation.

Payment Arrangements

When you car is about to be repossessed, you should contact your lender as soon as possible and make arrangements for payments. Your lender will want to know how soon you can bring your account up to date.

Negotiate

Sometimes you can not make payment arrangements to the lender's satisfaction and they will call a repossession company to pick up your car. If you are short of funds, you may have to exhaust any resource you have to keep your car from being taken.

Repossession

When you car is actually repossessed, you have a certain amount of time to retrieve it before it is sold at an auction. The lender may require you to pay the entire balance in full if you have not been cooperative in the past. Most likely the lender will request that you pay the amount past due plus any fees incurred as a result of the repossession process.

Auction

A repossessed car is sold at an auction to the highest bidder. When the car is sold, the money received from the new owner is applied towards the balance of the loan. Some lenders will require you to pay any balance remaining, which was not covered by the sale of the automobile.

Credit Report

A repossession will show up on your credit file and reduce your credit score. This can affect your ability to receive credit in the future.

References

• The Repossession Process