What Happens in Reposession?
If you depend on your vehicle to get you to school, work, the store and other places, you want to avoid repossession. Defaulting on your car loan, failing to purchase car insurance or having an expired lease can lead to your vehicle being repossessed.
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Seizure
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When your car is being repossessed, creditors typically seize your vehicle. Some creditors hire towing companies to seize the car. Other creditors make you agree to install electronic disabling devices in your car to prevent your car from starting if you default on car payments.
Auctions
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After your car has been repossessed, creditors decide if your car will be kept for compensation, or resold at auction. According to the Federal Trade Commission, creditors must inform you of the auction date, time and location, so you can participate in the bidding if you so choose.
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Potential
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Repossession can have a negative impact on your credit report, and potentially cause lenders to deny you credit in the future. To prevent a repossession, call the creditor to try to make payment arrangements. Keep in mind creditors aren't legally required to make an arrangement with you once you default on your car loan.
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