Lenders Attempt to Collect
In the first stages of a vehicle repossession, lenders tend to reach out to the borrower to work out some form of payment arrangement. The repossession procedure costs a considerable amount of time and money for lenders, so many banks are eager to avoid the process by establishing catch-up plans and extensions with their debtors. According to NoLo.com, a legal advice website, lenders may allow borrowers to miss one or two payments without formal repossession actions. The legal adviser goes on to reiterate that lenders can work out a number of arrangements for borrowers to avoid the expensive repossession process.
Lenders Contract out the Repossession
Few lenders actually carry out car repossessions on their own. Instead, most lenders contract out the work to trained repossession specialists. These specialists know local ordinances regarding repossession of vehicles and work closely with sheriff's and police departments to ensure a smooth, hassle-free procedure. When a lender contacts the repossession agent, the financial institution provides a copy of all necessary paperwork, a key to the vehicle and, when possible, information on where the vehicle might be located. The repossession agent then notifies local law enforcement that he is about to make a repossession, he then locates the vehicle and either tows or drives it away.
Repossession Agents Remove Personal Artifacts
Once a car has been repossessed, the repossession agent notifies the lender who, in turn, notifies the borrower. In most states, repossession agents remove all personal, nonattached items from the repossessed vehicle, such as sunglasses, CDs or clothes. Installed accessories such as CD players, subwoofers and alarm systems are considered part of the vehicle and left in place. If the borrower contacts the repossession agent, he may be able to retrieve his belongings; otherwise, the repossession agent retains the belongings for a period of time specified by state and local regulations before discarding them.
The Lender Sells the Vehicle
After a vehicle has been repossessed and returned to the lender, the lender begins liquidation. The exact process for selling a repossessed car varies from lender to lender, but small lenders may attempt to sell the vehicle themselves while larger lenders with a higher volume of repossessions may simply send the car to auction. When the vehicle sells, repossession, sales and auction fees are deducted from the remaining balance owed on the car. If the amount brought in by the vehicle's sale is not enough to repay the entire outstanding debt, the borrower is typically responsible for repaying the remaining balance (even though he is no longer in possession of the car).
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