What You Should Know About Car Repossession
When buying a car through financing, there are certain risks involved. If you miss payments on your car, usually 90 days worth, the lender can send a repo person to take it away. There were more than 1.5 millions vehicles repossessed in 2007 and the number is expected to be much higher for 2008 due to the current economy.
The most important thing to do before financing a car is to make sure that the vehicle and its payments are affordable for you in the long term. Remember that you will also need to pay for insurance, gas and possible repairs. Take financing contracts home and read them carefully before signing. Understand under what terms the lien holder can repossess the car so that you won’t be surprised.
What to do if you’re late with payments:
If you’re late with a car payment, or you know your going to be late, contact your lender. It’s important to communicate with the lender about your situation. Let them know when you plan to pay. If you think that you will continue to have trouble with future payments, ask the lender about re-financing options.
If there is even a chance that your vehicle may be repossessed, remove your personal belongings. It may be difficult to get them back after wards, and they could even "disappear" in the process.
What to do if a repo man shows up at your door:
If the car is going to be taken, it’s better to give up the car voluntarily so that you won’t have to pay the repo fees. Make sure to get all of the information, the person’s name, the date and time, etc. in case a legal issue comes up.
What to do after the vehicle has been repossessed:
There are state laws regarding repossession. If the lender did not conform to your state’s notification laws, a penalty can be issued against the lender’s ability to collect. Contact a consumer lawyer or advocate for help. The National Association of Consumer Advocates is a great resource.
Some states require that owners be given a chance to make good before the car is repossessed. In every state the consumer has a right to redeem the car, to pay all that is due and the expenses to get the car back.
If the lender has lawfully repossessed the vehicle and you can’t get it back, the lender will then sell the car to someone else, and you will have to pay the difference between the amount that you owe on it and the amount that they sell it for, as well as possible fees for repossession, cleaning, transport and resale. Most repossessed cars are resold within a couple of months. Many are sold at auctions.
If you are on active military duty and you bought the car before you went on active duty, a creditor cannot repossess the car without a court order, under federal law.
How your credit score is affected:
Having a vehicle repossession listed on your credit report can knock your score down by up to 200 points depending on the exact circumstances. It will stay on your credit report for seven years. Usually after 3 years have passed since the creditor listed your repossession on your credit, you credit score will begin to improve, especially if there is no money owed on the vehicle. If you still owe money, it will be slower to improve.