Not paying your automobile loan for several months will prompt your lender to repossess the car. Lenders do work with borrowers, and if unable to make a payment, they may renegotiate the terms of your agreement or allow you to skip a month. But if money problems continue and repossession becomes inevitable, the consequences of a repo can last for years.
Credit Report
Within months of repossessing the automobile, your lender will send a notation to the credit bureaus and include this entry on your credit file. Repossessions are serious, and this remark remains on your report for a duration of seven years. Any lender or creditor reviewing your credit report in the future will see this information, which makes it harder to acquire a new car loan. If you are approved for a new car loan, the lender will charge high finance fees because of your high-risk status.
Credit Score
A repossession on your credit report makes it difficult to get other types of credit. Mortgage companies, banks and credit card companies may hesitate to approve your request for financing due to a drop in your credit score. If applying for employment with a bank or other company in the finance industry, a low credit score and a past repossession can prevent you from getting the job. These types of employers and some insurance companies review credit histories before offering candidates a job or writing an insurance policy.
Unpaid Debt
Having a lender repossess your car doesn't end the ordeal. They'll sell the car at an auction to the highest bidder. If the auction sale price isn't enough to cover the entire car loan balance, lenders will come after you for the remaining balance. Deficiency judgments are common with foreclosures and car repossessions. Your auto lender may sue you for this money, and place a judgment on your credit report if you cannot pay.
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