When a Repossession Can Occur
In most states, creditors can repossess your vehicle once you’ve defaulted on the loan. What constitutes default varies from loan to loan, but it could be as soon as the account is 30 days past due. Review your contract to be certain when your loan is in default. In practical terms, repossession isn’t likely to occur so quickly. It’s in creditors’ best interests for you to bring the account current, so they are not likely to go to the extreme measure of repossessing a vehicle after only one missed payment. This is where common sense applies. If you are in communication with your lender and making an effort to bring your account current, the lender is less likely to pursue repossession. Lenders would rather have your money than the vehicle. However, if you continue to fall further behind on your payments and the lender cannot reach you, repossession becomes much more likely.
Hiding Your Vehicle
Repo men can enter your property to seize your vehicle in most states as long as they do not breach the peace. What this means is that they can enter your property to seize the vehicle, but they may not use physical force or threats, and they may not break into a locked garage or another storage facility. So, by locking your car in your garage, you can keep it from repossession for a while, but creditors eventually will pursue legal action against you in the form of replevin, which means they will seek a court order compelling you to turn over the car. Details for orders of replevin will vary from state to state, but you can’t realistically expect to be able to hide the car for an extended period of time without the creditor pursuing alternative measures. If you are served with an order of replevin, a refusal to turn over the car becomes a violation of a court order, not just a refusal to cooperate with a repo man. With a court order in hand, a repo man can bring a law enforcement officer to your property to enforce the court’s wishes.
After Repossession
After repossessing your vehicle, lenders typically will sell it and use the proceeds to pay down your outstanding balance and any fees associated with taking possession of the vehicle and preparing it for sale. You still will be responsible for the remaining balance. State laws vary, but lenders generally are responsible for notifying you of when and where the vehicle will be sold at auction. If it is a private sale, they’ll have to inform you of when it was sold. The sale also must be deemed to be commercially reasonable. This means the price the lender accepts for the vehicle should be comparable to the prices similar vehicles fetch in similar circumstances. It’s best to consult with an attorney if you are concerned your lender did not get enough money for a repossessed vehicle. Depending on where you live, you may be able to reclaim your vehicle by paying your outstanding balance plus any applicable fees associated with the repossession. In this case, your loan contract is simply reinstated and you are bound by the same terms.
Working With Your Lender
If you are having financial difficulties, lenders would prefer to work with you than to invest time and money in chasing after you and your vehicle. If you are dealing with a short-term financial crisis, it’s worth it to ask your lender about skipping a payment. Some banks and credit unions offer this as a standard feature for customers in good standing. Others may consider allowing you to skip a payment as long as you come to them soon enough that your account is current when you ask. Doing this means you won’t be required to make a payment for one month, but interest will continue to accrue on your account. If you are facing a more significant financial crisis, you’ll likely need to attempt to sell the car. Ideally, the sale price would be enough to cover what is owed on the vehicle. If not, you will need to find the cash to cover the balance. If you are proactive enough and address the problem before your credit takes a hit, you might be able to take out a loan to cover the difference. If you already are behind on your payments but believe you can catch up, your lender likely will work with you as long as you stay in communication and display an ability to reduce the amount of the balance that is overdue. If you are making progress, lenders typically will be far more interested in working with you than in trying to repossess the vehicle.
