If you've recently lost your vehicle to a repossession, you may still have a chance to get it back! The minute a repo man drives off with your car in tow isn't your last opportunity to make things right, but you may have to hurry.
If you fall behind on your loan payments, or otherwise default on your auto loan contract, a lender has the right to repossess your vehicle. This means hiring a recovery company to come and haul away your car.
Your vehicle can be repossessed as little as one day after default, depending on your contract. If you're worried that you're headed toward a repo, contact your lender right away. In some cases, a lender may be able to give you options such as payment deferment, or moving your payment due date.
They can't help in every situation, though. If you don't work something out, it's a good idea to remove your personal items from the car because a repossession can happen anywhere – from your own driveway to the parking lot at the grocery store.
2 Options for Getting Back Your Car
When you're unable to stop your vehicle from being reclaimed by the lender, you're not out of options. There are typically two ways to get your car back. However, each option isn't available in every state, so it's wise to check the laws regarding repossessions where you live from a legal website such as Nolo.com.
After a repo, you may have one of two options: redemption or reinstatement.
- To redeem your loan, you have to pay off the entire loan balance all at once, plus fees and repossession costs. You can do this at any time before the vehicle is sold privately or at auction. Your lender should contact you within five days of the repo in a written notice, detailing your right to redemption. If you haven't heard from your lender, contact them ASAP. Your right to redeem ends when the car sells.
- Reinstatement gives you the opportunity to make up all your past due payments, plus fees and late charges. This is a good option to have since not everyone has the means to pay off their entire loan balance in a redemption. However, the right to reinstatement isn't granted automatically in every state. If your state doesn't have a right to reinstatement, it must be listed in your contract to apply.
If neither works in your situation, you may still have a shot at getting your vehicle back when it's sold at auction.
Buying Your Vehicle at Auction
If your car is slated to be sold, the lender has the obligation to let you know where and when so that you can participate, too. Even though it's your vehicle being sold, though, you have to bid on it just like everyone else.
Even if you win the car at auction, you’re still on the hook for the remaining loan balance, called the deficiency balance. Just because you won the vehicle in a bidding war doesn’t mean you no longer have a responsibility for the loan. If someone else wins, and the sale isn’t enough to cover the entire loan balance, you’re still responsible for it.
If you win the bid, you may end up spending more than you originally owed after taxes and fees from the auction. Additionally, nearly every auction requires that you pay cash.
Buying a Car After a Repossession
It's not always possible to get your car back after a repossession if you don't qualify for the options above. It can be tough to get another auto loan after a repo as well, but it's not impossible. Most lenders, including subprime lenders, don't loan to borrowers with a repossession that’s less than a year old on their credit reports. Having one lowers your credit score initially, but the damage lessens with time.
If it's been less than a year since your vehicle was towed away by a recovery company, you may still be able to get a loan by going through a buy here pay here car lot. These in-house financing dealers are also lenders, and they don't always check your credit. This may be just the route you need to get an affordable vehicle until you can repair your credit.
However, if you're ready to kick off your credit building ability by getting another auto loan, and you're far enough past your repo, Drivers Lane wants to get things started! We can save you the trouble of searching for dealerships that work with subprime lenders – we've built a nationwide network of them over the past 20 years.
To be matched to a dealer in your area, simply fill out our easy car loan request form, and we'll get to work for you!