How to Survive an Auto Repossession

Surviving an Auto Repossession

If you are behind on your car payments and receive a “Notice of Default and the Right to Cure and Intention to Repossess”, you may be facing imminent car repossession. If there is any way you can avoid repossession and get caught up with your payments, do. But if you’re unable to come up with the past due balance, don’t panic! Even if your vehicle is repossessed, there’s a good chance you can get it back if you act quickly.

Whatever you do, take a Notice of Default seriously. In the past, lenders were more lenient and would sometimes wait months before resorting to vehicle repossession. But times have changed and many lenders are repossessing vehicles soon after issuing a Notice of Default. With fewer automobiles being purchased and more consumers falling behind on their payments, lenders and dealers are looking for cash where they can find it. While they don’t want to have to repossess vehicles and take losses on contracts, they too are trying to survive this tough economy.

If you are facing repossession of your vehicle, you’ll increase your chances of getting your vehicle back if you follow the tips and advice on what to do and what not to do in this situation.

1. Don’t attempt to hide or conceal your vehicle.
An example of this would be parking the vehicle a few blocks away or stashing it at a friend’s house. The repossession companies have seen it all and know every trick in the book. They will find the vehicle and this can hurt your chances of getting the vehicle back. If you are suspected of trying to hide or conceal the vehicle to avoid repossession, your dealer or lender could use this to disqualify you from reinstating your contract at a later date.

2. Keep your cool.
Don’t lose your temper with bill collectors calling to collect past due payments on the vehicle. Although these collectors can be abrasive and downright nasty, do not yell at them, call them names, curse at them, or verbally threaten them. Do not make threats to damage or destroy the vehicle These calls are usually recorded and any such threats can be used against you to deny later reinstatement of your contract if your vehicle is repossessed. Be polite and businesslike at all times when dealing with the collection department.

3. Remove all personal items from the vehicle.
This includes CD’s, sunglasses, snow chains, cell phone chargers and any other personal belongings that you have stored in the glove compartment, trunk, seat pockets or back seat. If your car is repossessed, you can be charged a “personal item storage fee” even for small, insignificant items. If there are no personal items in the vehicle at the time of repossession, there should be no charge for this if you later redeem or reinstate your contract on the vehicle.

4. Do not attempt to interfere with a repossession operation.
If a tow truck pulls up on or outside your property to repossess your vehicle, you may ask to see the repossession order. The driver is required to show you this paperwork if asked. At this point, do not try to talk the driver out of taking the vehicle and don’t give him a sob story. There is absolutely nothing he can do to stop the repossession process. He’s just doing his job. Be polite to the driver and don’t take out your frustration and anger on him. Do not threaten the driver or try to stop him or block him from accessing the vehicle. If you get violent or physically try to interfere, the police may be called into the matter. If you are anything less than cooperative, this may be used against you to prevent you from redeeming the vehicle or reinstating your contract at a later date.

5. If you know that the Repo Man will be knocking on your door imminently, you may voluntarily surrender your vehicle, meaning, you drive it back to the dealership. Contact your lender or dealer to find out where to take your vehicle. Even if you voluntarily surrender the vehicle, you may still be able to redeem or reinstate your contract later. Because there was no Repossession company involved, there won’t repossession fees that you’ll have to pay.

How to “Redeem” Your Vehicle

“Redeeming” your vehicle means that you pay off the full balance owed on your contract plus the costs of repossession. Once the vehicle is paid off, it is yours free and clear. If you aren’t able to pay off the vehicle, you may be eligible to reinstate your contract with your dealer or lender.

How to “Reinstate” Your Vehicle Contract

“Reinstatement” is the conditional right to renew your contract with the dealer or lender. If you plan to get your vehicle back after repossession, but can’t pay it off in full, you may have the right to reinstate. The best thing to do is to contact your dealership or lender and find out what is required and if you’re qualified. Do this right away and don’t wait until the last minute. In some cases, you will have several weeks from the date of repossession to reinstate your contract. You may have the right to file for an extension. Your dealer or lender will send you written instructions after the vehicle has been repossessed explaining what you need to do. Call them if you have any questions and get the paperwork started early even if you don’t have the money to get caught up on your payments yet.

If you plan on getting your vehicle back, do not cancel your car insurance policy. You’ll be required to show proof of current insurance in order to reinstate your contract and get the vehicle back. You will also have to show proof of current registration with the DMV. Additionally, you may be required to show proof of income and proof of residency in order for the dealer or lender to reinstate your contract. Some lenders may ask you to provide personal references.

You will have to get caught up with your account in order to get your vehicle back, which will include coming up with all past due and current car payments. The dealer or lender will also require you to pay for any late charges, repossession costs, storage costs and other fees. If you are eligible for reinstatement of your contract, the dealer or lender will send you an itemized schedule of fees that need to be paid.

If you can reinstate your contract on the repossessed vehicle, do. Although a repossession will go on your credit report, it is easier to reinstate your contract than to go out and try to buy a used car with a fresh repossession on your credit. Unless you have a lot of cash to buy a new car with, it won’t be easy getting another car loan and you will still be liable for paying off your original contract.

If you owe more money to the dealer or lender than the car is worth, you are still liable to pay it off. If you let the car go and the dealer or lender sells the vehicle at auction, don’t expect much. Cars at auction sell for very little money and you’ll still have to pay the balance of what you owe, less whatever the vehicle sells for. A suit can be brought against you for any unpaid money that you own on your original contract.

Repossession is frustrating for everyone. If you find yourself facing this situation, remember to stay calm and try to work out a solution with your dealer or lender.