Generally, most lenders start the repossession process once you’re in default – usually at least 90 days past due on a payment. When the loan is actually considered in default can depend on the language in your loan contract. Depending on your lender, the repossession process can start one day after a late payment, though.
When Does the Repo Process Start?
How quickly a lender hires a recovery company to collect the vehicle depends on your state and your auto loan contract. Some lenders, such as buy here pay here (BHPH) dealerships, may start the repo process when you’re no more than a day late on your car payment. In some cases, these dealers place kill switch devices and GPS trackers in the vehicles they sell to make the repossession process easier. This disables your car and sends the location to a recovery company for immediate pickup.
For borrowers who aren't financing through a BHPH dealership, the repossession process is likely to start once you’ve missed a payment; typically, that’s at least 30 days past due. After this point, your loan is likely considered to be in default.
It’s important to know that in many states, your lender isn’t required to notify you when or where they’re going to repossess the vehicle – or even tell you that the repossession process has started. Some lenders may send notices of an impending repossession, but it’s not always required. It may be up to you to open a line of communication with your lender to stop a repo.
Can You Stop a Vehicle Repossession?
While your lender may not be required to notify you that repossession is coming, you’re still likely to get some form of communication from them once you’re 30/60/90 days late on a payment. It may be hard to believe, but your lender likely doesn’t want to go through with the repossession process, either. For them, it's a costly and time-consuming process, and they’d rather have you actively paying on the loan.
Some lenders offer deferment programs for borrowers in tough financial times. This involves getting one or more payments paused and then typically added to the back-end of your loan. Occasionally, lenders may be willing to work in other ways as well. Some may adjust the terms of your loan or move the payment due date to something more convenient to your pay schedule.
Another route to explore is refinancing. Refinancing is when you replace your current auto loan with another one on the same vehicle. Most borrowers refinance to get a lower monthly payment by either extending the loan term or lowering the interest rate. If you qualify for refinancing and manage to score a lower monthly payment, it could help you avoid a repo.
Can You Get Your Car Back After a Repo?
If you think you’re on the path to repossession, the quicker you act, the more likely you are to find a solution. If you can’t avoid a repossession, then hope still isn’t lost. After a car is repossessed, you’re likely to receive documentation from your lender on the steps to take to get your car back. There are typically a few options to get your car back if you can afford them.
If you think you’re on the repo route, and refinancing your vehicle isn’t an option for you, then it may be time to consider another car loan. Sticking with your current auto loan that’s on its way to default can damage your credit, and repossession on your credit reports can hurt your loan opportunities for years to come.