When your lender has your car or other property repossessed, it sells the property, usually at auction. If the proceeds from the sale don’t cover the total of what you owe to the lender—they rarely do—you might be liable for the balance, called a “deficiency” or “deficiency balance.”

What happens if a repossessed product is sold for more than what is owed on it?

In rare cases, if your lender sells your car for more than what you owe (including the lender’s expenses), the difference is called a “surplus” and the lender may be required to provide the surplus funds to you.

Can I buy a house with a repossession on my credit?

The short answer is yes, you can still get a loan after a repossession. However, there are very few lenders who are willing to take a risk on someone with bad credit or negative marks on their credit report. Those who are willing may require you to pay higher interest rates and fees.

Selling your repossessed items If they sell the items for more than what you owed, you should be refunded the extra. Sales must be commercially reasonable and done by auction, public tender or private sale. If the lender doesn’t hold a sale within 30 days, you can require a sale by auction.

What happens to my car after it is repossessed?

What happens after a repossession? After your vehicle is repossessed, the lender will typically send a Repossession Notice, frequently called a Notice of Intent to Sell Property. This letter confirms that your vehicle was repossessed and tells you how to get the vehicle back. It also tells you when and where your vehicle will be sold or auctioned.

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.

What happens to my car loan when it is sold?

It also tells you when and where your vehicle will be sold or auctioned. Once the vehicle has been sold, the lender will send a Deficiency Notice. This letter shows the selling price of your vehicle, and deducts that amount from the balance owed on your loan.

Do you have to pay a repossession fee?

Often charges for storage and a repossession fee are added to the balance claimed by the lender. These charges are added to the total balance owed in order to satisfy the loan. You’re required to pay this outstanding balance under the terms of your loan agreement.