Do you still owe money if your car is repossessed?
Isabella Wilson 
If your car or other property is repossessed, you might still owe the lender money on the contract. The amount you owe is called the “deficiency” or “deficiency balance.”
How do I get my repossessed money back?
Lenders will typically provide a few options for your consideration including refinancing your loan, looking into a deferment or developing a new payment option.
- Restructure your loan.
- Defer a payment.
- Trade-in your car for a more affordable option.
- Sell your car outright.
- Voluntary repossess your car.
Do I have to pay a repo?
In most states, you have to pay off the entire loan to get your car back after repossession, called “redeeming” the car. The balance you would need to pay to redeem the vehicle might include extra fees and charges, including repossession and storage fees, and even attorneys’ fees.
Do you have to pay a deficiency balance?
Who is Responsible for the Deficiency Balance? The original borrower is responsible for paying the deficiency balance. However, some lenders may forgive or write off that balance if it’s clear the borrower has no assets to pay.
Many people have a misconception that if you give back the car, even with a voluntary repossession, you won’t have to pay any other money on the loan. Unfortunately, this isn’t true! You still might owe the loan company some money. There is no personal property, house, or car that can be taken.
Do you have to pay deficiency balance on repossessed car?
Chances are high you’ll have to pay a deficiency balance on your repossessed vehicle. The deficiency balance is the difference between the amount your vehicle sells for and the amount you still owe on the auto loan.
When does a car lender want to repossess your car?
Lenders are able to do this because car loans are security loans; this means the lender grants the loan based on collateral (the vehicle) and can repossess that collateral in the event you don’t make your payments. Generally, car repossession occurs after a series of missing or late payments without any communication or agreements with lenders.
Can a lender collect a deficiency after a Reposession?
In most states, the lender can try to collect the deficiency from you. Some states restrict the lender’s ability to collect a deficiency under certain circumstances. Those circumstances rarely apply in car repossession cases, though.
What happens when you default on a car loan?
After you default on your car loan and the lender repossesses the vehicle, the lender will usually sell the car, either through a private sale or at a public auction, to recoup what you owe. In many cases, the sale proceeds aren’t enough to cover the remaining balance on the loan plus the lender’s costs in repossessing the car.
