What Happens With an Auto Repossession?
Repossession is a process that auto lending agencies take to recover their assets when a car buyer defaults on an auto loan. In a repossession, the lending agency hires someone to forcibly remove and impound the automobile.
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Default
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According to the Federal Trade Commission, in many states, lending agencies have the right to seize a vehicle as soon as the borrower defaults on the loan by missing a payment or paying late.
Vehicle Seizure
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After the borrower defaults, the lending agency or creditor send out trained repossessors to seize the vehicle. Although it is legal for repossessors to "break in" to a seized vehicle, they may not damage the car or otherwise "breach the peace," according to the FTC.
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Property
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If there is any personal property in the vehicle, it must be promptly returned to the borrower. Creditors are not allowed to keep or sell personal property.
Vehicle Sale
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After seizing the vehicle, the lending agency may decide to sell the vehicle at auction or retain it as satisfaction of the debt. The borrower may be entitled to redeem his vehicle by paying the amount owed, according to the FTC.
Deficiency
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According to the FTC, a deficiency is the difference between the auction sale price or value of the car and how much the borrower owes. The creditor may sue for the deficiency.
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References
- Photo Credit luxury car - model toy car image by alma_sacra from Fotolia.com
