What Happens After a Vehicle Is Repossessed?

Vehicle repossession can be a frightening experience for a struggling borrower. In the event that a car note goes unpaid, the lien holder has the right to repossess the vehicle and recoup its losses. When a repossession company shows up to take the vehicle, it is wise to be agreeable and hand over the keys, and ask for contact information for the person who ordered the repossession and where the vehicle will be stored. A legitimate repo company will give you this information, and will usually let you remove personal items from the vehicle if you are being cooperative.

Storage

A repossessed vehicle is placed in a secure storage area for a predetermined amount of time, usually around seven days. The plates remain on the vehicle, and it remains in your name, which means you must keep your insurance active.

Contacting the Lien Holder

During the storage period, you will be given the opportunity to pay any amount that is in arrears as well as towing and repossession fees. If you are able to pay the full amount, you can retrieve your vehicle. If you cannot come up with the money, then the next step in the process begins.

Auction

If a person can't pay what is due, the lien holder may auction the vehicle, which now belongs to the lender, along with any stereo equipment or other accessories installed by the borrower. Some of these auctions are public, and some are held privately for car dealers. At this point, all you can do is hope the auction brings a high enough bid to cover what you owe. When the car goes to auction, your tags are returned to you and you can cancel your insurance.

Remaining Balance

Any balance remaining after the car is auctioned is your responsibility.

Future Purchases

A vehicle repossession will show on your credit report, but the lien holder can work with you. If you have set up a reasonable payment arrangement for the balance and are honoring it, they can mark it as an account in good standing; if you refuse to pay or cause problems, on the other hand, they can list it as a bad account, which will prevent you from getting an auto loan for a very long time. The lender can also turn the account over to a collections agency, which will put more bad marks on your credit report. Cooperation is key to surviving a vehicle repossession with some of your credit intact.