Your purchase contract specifies when and why your vehicle can be repossessed. In most cases, the bank can repossess the car as soon as you miss a payment, although most banks typically do not act that quickly. If your account is past due, immediately call your bank to avoid repossession. Repossession is reported to the credit bureaus and damages your credit.
New Contracts
If you financed through a dealer, you usually have 30 to 45 days until your first payment is due. If for some reason you did not get your loan information or a payment booklet from your lender, call your dealer to obtain the lender information. Check your lending contract if you are unsure who financed your loan; the bank's phone number and address is listed on the front of the contract. Call your bank to pay the amount past due.
Non-Payment
If you have already missed two car payments, your bank will likely start the repossession process soon, if it hasn't already. Your contract specifically states your amount due and due dates, which you agreed to when you signed your loan contract. Call your bank right away to discuss your options and avoid repossession. If you are experiencing financial hardship, your bank may allow you to make a partial payment or offer other payment assistance.
Repossession Process
Your car can be repossessed from your home, work or even a parking lot or gas station. Once the vehicle is repossessed, your lender may offer you an opportunity to pay your past due amount, late charges and repossession fees to get it back. If you do not pay, the car is sold privately or at auction. If your loan balance exceeds the sales price, you must pay the outstanding amount or the bank can sue you and eventually garnish your wages. If you owe less than the vehicle's sales price, the bank will issue you check for the excess amount.
Other Options
Call your lender to discuss payment issues. Because you probably owe more than your vehicle's value, the bank would better benefit from working out a payment plan with you instead of repossessing the car. You may be able to defer your payments, meaning you can skip one or several payments. This can buy you time until your finances are back in order. Depending on your payment history, your bank can also extend your term to lower your payment.
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