What Happens If a Vehicle Is Repossessed?
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If you have fallen behind on your auto loan payments and defaulted on your loan, your vehicle will be subject to repossession. Most states do not require lenders to notify you regarding when your vehicle will be repossessed. Once the lender has possession of the vehicle, your vehicle will be forwarded to the lender's authorized repossession location, where you will be able to retrieve any belongings left in the vehicle.
Retrieving the Vehicle
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You usually are able to retrieve your vehicle if you pay the past-due balance and any repossession fees. The lender will provide you with the exact amount that is due and the time frame in which you have to pay the balance. Some lenders will allow you up to 30 days to obtain your vehicle, but keep in mind that you may have to pay vehicle-storage fees. Laws regarding this process vary from state to state, so verify your state's laws.
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Deficiency Balance
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If you choose not to get your vehicle back, the lender can keep your vehicle or sell it to offset the unpaid balance of your loan. Most lenders choose to sell repossessed vehicles, and it is possible that your vehicle will be sold for less than is owed on it. The amount for which the vehicle is sold will be subtracted from your loan's unpaid balance, and you will be responsible for the difference. This difference is known as the deficiency balance, and the lender can take legal action against you to recover this amount.
Legal Action
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If legal action is taken against you for the balance, you will receive notification from the court. You should appear in court on the specified date; this will be your chance to offer a defense. Should the court rule in favor of the lender, you will be required to pay the unpaid portion of the loan, along with any applicable legal fees. With a judgment in place, the lender can garnish your earnings for the balance.
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