Car Repossession Basics 
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What can I do about my Auto Repossession?
Nobody wants to have his or her car repossessed.
The situation is stressful, potentially embarrassing and can leave you without transportation and a lot of unanswered questions.
Auto repossession is also often an unexpected event, which can leave you confused, angry and desire to know your legal rights as the car owner.
The car repossession process.
First of all, having a vehicle repossessed is among the most damaging things that you can have on your credit history.
It is particularly dangerous if the car loan belongs to a person with poor credit history.
At Valley Auto Loans, we know these things for a fact.
Our company has aided prospective car buyers with poor credit to find affordable loans online, as well as the dealerships that will give them the best possible chances of having their loan or lease approved.
We will be looking at a few facts about car repossession to help you gain a better understanding or what to do next.
What happens when your car is repossessed.
Those with bad credit histories are at a higher risk of eventually having their car repossessed.
Experian, a favorite credit reporting company, states that borrowers who are using sub-prime loans to finance their vehicle purchase are doubly at risk of experiencing a repossession.
But not all car repossession is a result of missing a car payment or two.
We are providing some of the FTC information to help you gain a better understanding of auto repossession and how the car repossession process can affect you.
We will explain what borrowers can expect if their vehicle is repossessed. Please note that this is not intended to be taken as legal advice but should assist you in negotiating with the lender.
Offloading a Repossessed Car
The car repossession process after having a car repossessed is time-consuming and frustrating.
The company you owe money to can choose to keep the vehicle as repayment for your debt, or they can sell it off either publicly or privately.
This will be decided by many factors the car lender looks at like your payment history and the money you still owe compared to the equity you built up.
They usually do not give you any notice you are facing repossession or warning that they are going to take the car.
They do this to prevent you from putting the car where they cannot find it. This is not a car dealer scam, but simply a precaution the lender takes in order to protect their investment.
If you have missed two or more payments and are facing repossession, the auto loan lender may ask you to come in person to get caught up with the payments.
You will need to be prepared to pay all the missed payments with cash at that time, and it would be an excellent opportunity to check into your states car repossession laws, so you know your repossession rights.
If you do not show up for the meeting, you can bet that the finance company will come for your car.
State Laws and Repossessed Cars
The creditor or repossession company may be obligated to tell you about what will be done with the vehicle after they take it depending on which state this occurs in.
If they intend to go through car repossession sales like a public auction to sell it, laws in that state might force them to let you know of the place, and time it will be held.
This gives you a fair opportunity to bid on and potentially re-obtain your car.
However, if the creditor opts to sell the vehicle through a private sale or auction, the law may require them to tell you when it will be sold.
You will not be able to take part in this deal.
Regardless of the situation, you might also have the right to buy back the repossessed vehicle simply by paying the total loan balance plus repossession costs. In any case, you will have to pay all repossession costs.
To avoid these charges you may consider a voluntary repossession where you bring the car to them and turn it over voluntarily.
There are many benefits to voluntary repossession like not being surprised when your car is gone or trying to get back the continence that was in the car when they took it.
Then you can negotiate what you will need to do to get the car back like paying any late payments as well as the remaining balance of the loan.
Costs associated with the car repossession can take the form of lawyer fees, sale preparations, storage expenses, and tow.
Alternatively, you may be able to buy the vehicle back by participating in the repossession sale.
If you corporate with the lending company and abide by their rules, they may let you have your car back if you catch up on the amount of money owed plus the penalty fees, and you do not have a history of many missed payments.
However this right falls on them, and they are much less willing to cooperate with you if you are not prepared to abide by their requests.
State Laws Differ
In some states, there are customer protection laws in place that let you renew your car loan.
Under these laws, after car repossession, you can get your car back by reimbursing your creditor for your late payments, deficiency balance and the costs related to repossessing the car.
However, it is important to note that all future payments have to be on schedule, and you must also abide by the stipulations in the loan.
Failure to do so could result in a second repossession.
By law, creditors must go about all repossessed car sales in a “commercially reasonable fashion.
” They are not required to get a high price or even a decent one, but if their selling price is under the fair market value, it might not be considered commercially reasonable.
The definition of this is often based on the standards in your particular state.
If the creditor does not sell your vehicle according to these criteria, you may be able to file a claim against them for compensation and possibly receive protection from a deficiency judgment.
Understanding Deficiency
A “deficiency” is the balance of what you still owe on your loan, including any added vehicle repossession expenses, and how much money collected by the creditor for the sale of the repossessed vehicle.
Say that you owe an additional $12,000 for your automobile, and the lender manages to sell it for $9,000. This means that the deficiency is still at $3,000, along with other fees not mentioned. To repossess a car is an expensive process.
The additional charges may consist of the creditor’s repossession costs as well as early loan repayment fees and early contract termination fees.
In most of the country, car repossession laws state that creditors are legally able to file a lawsuit against you for a deficiency judgment to obtain the full remainder of your debt.
However, the creditor must have strictly adhered to the standard rules regarding resale and repossession to sue you.
Furthermore, the creditor will owe you money if it is discovered that there’s money left over after the sale, and once it has been applied to your loan debt and any outstanding fees. Unfortunately, this is a rare occurrence.
In certain cases, you might have a sound defense from a deficiency judgment. A good example is if the creditor violated standard practices.
Selling the car in a commercially unreasonable fashion or failed to file a civil suit against you within the time frame allowed by the statute of limitations.
A lawyer can let you know if your case is solid enough to challenge a judgment of deficiency.
The Federal Trade Commission (FTC) has an answer to many commonly asked questions regarding car repossession.
Knowing where you stand can go a long way toward helping you with decisions about your repossessed car and your bad credit car loan.
Voluntary Car Repossession Can Save Money and Some Bad Credit
If you are facing car repossession, you can choose to work with your lender to save you some money, and it may even help maintain your credit score. By choosing to turn your car in, you still default the loan, and you will still be charged the deficiency along with the penalties of the loan default.
You can contact the lender and make arrangements to drop the vehicle off. This is common with some bankruptcy cases where you will not be required to pay the rest of the loan but you loose the car.
This will save you the cost of an agent picking up the automobile. This service usually adds up to hundreds of dollars.
You can also ask the lender to hold off on reporting the missed payments.
In turn, you will cooperate with them in turning in your car quickly so they can re-cooperate their assets faster.
Resisting working with the lender only costs you more money and headaches in the long run.
Other Forms of Car Repossession
Missing some car payments is not the only way your creditor can repossess your car. Let’s look at some other examples of car repossession.
Can My Car Get Repossessed From a City Impound Yard?
Yes, If your car is impounded because it was used in a crime or removed from a parking area and is moved to a city or county impound yard your lender may repossess your car.
It will be your responsibility to pay all fees to get it out of the yard before it gets repossessed.
Your lender has the right to repo your car even if you are up to date on your payments to prevent them from losing the car they legally own.
Again, if this happens, you will be held responsible for ALL the fees including towing, storage, city or county fees plus any fees from your lender.
This can even include any cost associated with jumping a car if it has been sitting there for an extended period of time.
If You Owe a Mechanic for Repairs
If you have taken your car to a mechanic for repairs and the bill was higher than you could afford. You decided to leave the vehicle until you get the money to repair it.
The Mechanic has the right to put a Mechanics Lien on the car. In turn, the creditor you owe payments to may repossess the vehicle to prevent the repair shop from putting a lien on the title.
If this happens, you will have to pay the repair charges, the expense for the repossession including towing and storage.
You may also have penalties charged by the creditor for the repossession.
Your monthly car payment history will have nothing to do with the type of repossession even if you are on time with your payments.
Your Rights
It is imperative that you be aware of what rights you have and the repossession laws in your state.
To get this information, it is recommended that you contact the Attorney General for your state or your area branch of the Consumer Protection Agency.
The Long and Short
It is much simpler to discuss debt repayment problems before the matter of repossession can become an issue, as opposed to after it is already affected you.
Car buyers who suspect that they may run into roadblocks when making payments on their vehicle loan are advised to speak to their lender as soon as possible.
Should your lender offer you a loan adjustment to help ease the burden, it is extremely critical that you obtain the conditions in writing.
Doing this will help avoid confusion of the parts of both yourself and your lender.
Make Wise Choices to Prevent Auto Repossession
The easiest way to handle car repossession is to prevent it, to begin with.
Make wise choices with the expenses of your car. Be responsible for getting quotes and paying your bills. Keep your lender informed if you have financial situations that will affect your car or the payments.
Many times they will have answers that will help your situation and prevent problems.
Helpful Advice
We at Valley Auto Loans work hard to help people who are struggling with poor credit, find the top auto sellers who will give them the greatest chances of having their loan approved.
You may have had a car repossession in the past or are in danger of an auto repossession now. If you are looking to repair your credit or refinance an auto loan that is dragging you down, it is easy to get started.
Just fill out the secure application on our site and send it in. Don’t let a car repossession set you back on your next loan.