What Happens When a Car is Repossessed?
When you finance a vehicle in St. Louis, you might assume that you are now the sole owner of it, but this isn’t technically the case. By way of an auto loan, you are borrowing the money for your car from a lender. This means you are not considered to be the owner of the car until you finish paying it off. If you were to stop making payments, your vehicle could be repossessed. What happens when a car gets repoed? The lender takes the car back from the borrower. This is done if on-time, in-full payments aren’t being made. Repossession is often done without warning and usually, a tow truck driver is sent to take the car away.
Know Your Rights Regarding Repossession
The terms and conditions you agree to when you sign off on your auto loan include the lender’s right to repossess the vehicle if you stop making payments. Even so, Herculaneum drivers do have some rights of their own to be aware of:
- Following repossession, the bank is required to notify you to let you know when your car is to be sold at auction. Can you get your vehicle back after repossession? You may be able to purchase it for the amount you still owe on it, as well as repossession and storage fees.
- Depending on your lender, you might be allowed to pay just the amount that you’re behind on and reinstate your auto loan. Again, you will also need to take care of repossession charges.
Voluntary vs. Involuntary Repossession
When you think about car repossession, your mind might immediately turn to the dramatized situations on TV where borrowers would rather destroy the car than lose it. In actuality, many car repossessions are done voluntarily. The borrower would call their lender and tell them to repossess the car because they, unfortunately, are no longer able to meet their payments. Voluntary repossession is always preferable to involuntary repossession, though your credit will be impacted in either case.
What is Deficiency Balance?
If the bank auctions your car off and it sells for more than what was owed on your auto loan, you are entitled to collect the difference. Conversely, if the car sells for less than what is owed, the lender may go to a court and have a deficiency judgment brought against you. What does this mean for you? You would be held responsible for settling the difference, i.e. the remaining loan amount that wasn’t taken care of when the car was sold.
How Long Does Repossession Stay on a Credit Report?
Unfortunately, car repossession remains on your credit report for seven years following the initial payment delinquency date. Repossession can continuously affect your credit score throughout those seven years, but the impact does lessen with time. What would happen if you applied for an auto loan less than one year after a repossession? There is a very high likelihood that you’ll be denied outright by most lenders.
Get More Advice from the Team at Green Light Auto Credit
My car was repossessed. What happens next? At Green Light Auto Credit, we are committed to helping Florissant drivers who are on the road to financial recovery get back behind the wheel. Contact us to learn more about how we can help individuals with bad or no credit find reliable transportation and secure an auto loan that works with their circumstances. Get started now when you apply online to seek pre-approval.