Unfortunately, the repossession process does not cancel your obligation to make payments under the loan or lease agreement. Once they seize the vehicle, the lender can sell it or put it up for auction. The proceeds of the sale will be subtracted from any balance that you owe.

What happens after a car repo?

After repossession, you’ll have to pay for the storage of any personal items left in the car and some lone agreements may require you to pay the costs of repossession and storage of the car itself.

How many points does your credit score go down after a repossession?

A repossession is going to drop your credit score between 50 to 150 points. The repo will stay on your credit report for 7 years. If you speak with the lender, in some cases they will negotiate a deal that does not include your credit being damaged.

How does it work when your car gets repossessed?

Repossession can occur as soon as you default on repayment. Though a loan contract may give a lender the right to take your car away after you default, the lender will typically will alert you of your missed payments and attempt to collect payment prior to repossessing the vehicle.

What happens to the balance on a car when it is repossessed?

Having your car repossessed doesn’t get you off the hook for your obligation to pay the entire balance of the loan. If the proceeds from the sale of the vehicle are not enough to cover the balance of your loan, the remaining portion is called the deficiency balance.

How can I get my car back after a repossession?

You can generally redeem your car if you pay the lender your entire loan balance, including all arrears and repossession costs. But most people usually don’t have the money required to redeem a car. Some states allow you to reinstate your loan and get the car back if you can cure all of your arrears and pay for the repossession costs.

What happens to my car if I default on my loan?

Repossession is only one of the remedies available to your lender if you default on your loan. Having your car repossessed doesn’t get you off the hook for your obligation to pay the entire balance of the loan.

Do you have to pay off your car loan to get it back?

In most states, you have to pay off the entire loan in order to get your car back after repossession. This is called the right of redemption. The balance you would need to pay to redeem the vehicle may include extra fees and charges (including repo and storage fees and even attorney fees).