How to Have Your Car Repossessed

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By Jen Errair
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Have Your Car Repossessed

Income and job loss are at an all-time high and it has forced many to re-evaluate whether or not they can continue to afford certain purchases. This article will provide guidelines that can assist you in making a decision as to whether or not to have your car repossessed. Please keep in mind that the laws of vehicle repossession vary by state and that the author IS NOT AN ATTORNEY. Consult an attorney who specializes in car repossession so that you fully understand all of the ramifications of doing so.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

A method of communicating with the lien holder (bank, other financial institution).

Step 1

Review your current expenses. Although this is often an unpleasant task, it will provide you with an overall picture of your total debt. In addition, it may bring to light spending patterns that could be curbed to save your vehicle (a passion for shoes, lattés, eating out, etc). By reviewing your expenses, you may also find that you could still keep your car by picking up a part-time job in your spare time.
Step 2

Have a back-up plan! Prior to delinquency on any payments, consider getting another bank loan or a personal loan to purchase a more economical vehicle. Evaluate your work situation - can you bicycle, walk or have access to public transportation to get to work? Keep these ideas in mind before making a final decision. Remember, repossession stays on your credit report for quite some time! Your chances of walking into a dealer and getting a replacement vehicle is highly unlikely, or if it DOES happen, they may charge you an extremely high interest rate to cover any risk should you default again.
Step 3

Communicate with your lien holder. By advising your lien holder (bank, credit union, other financial institution) of your difficulties to make payments, they may be able to offer you any number of options in lieu of repossession such as refinancing your loan, lowering payments for a certain period of time, etc. You should also ask how many delinquent payments you must have before the bank considers repossession so that you have an idea of how long it may take. Financial institutions do not WANT your car, because it then becomes part of their inventory and they now have to sell it to attempt to recoup part of the debt that you are defaulting on.
Step 4

Be advised of both your rights and the rights of the bank/lien holder. If you are currently "upside-down" in your loan (i.e., you owe more than the car's worth), in most states, the bank can legally sue you for the remaining balance on the loan. For example, if you owe $25,000 and the car is worth $8,500 (or that is what the bank gets at auction once it has been repossessed), you may STILL BE LEGALLY RESPONSIBLE for the $16,500 remaining on the loan. It could POSSIBLY be written off as bad debt, but be prepared if it is written off to an attorney for collection.
Step 5

There are two ways to have your vehicle repossessed; voluntarily or not. The main difference is whether or not you wish to control when the car is returned, or if you want to risk being stranded when it happens. Whether you voluntarily relinquish the vehicle or wait for the bank to repossess it, it still shows as a REPOSSESSION on your credit report! Unfortunately, you do not get bonus points for one over the other.
Step 6

REMOVE ALL PERSONAL ITEMS (including your garage door opener) FROM YOUR VEHICLE!! Banks and those in the repossession business are unpredictable. Keep a house key on your person at all times, hide a spare outside your home or make sure a friend/family has a spare. If you have made any modifications to your vehicle (upgraded stereo system, woofers/sub woofers/rims) you should keep the factory ones to reinstall prior to the vehicle being repossessed. Chances are, you will not receive these items back without replacements.
Step 7

If you choose to voluntarily relinquish your vehicle to the bank, double check with them to see where they would like you to leave the car. There is often paperwork involved that needs to be signed, keys to be turned over, and the bank usually has a predetermined location for this to take place. Make sure to take photo identification, and all keys/locking mechanisms, and plan for a ride home if you do not have another vehicle.