Just how much time you have between missing a payment and repossession depends on varying factors, including the state you live in. For example, Iowa doesn't permit it until 20 days after a written notice has been issued, while in most states, lenders have the right to take back your car at any time without notice once the loan is in default.
Avoiding an Auto Repossession
As soon as you realize you’re going to miss your next payment, reach out to your lender and let them know about your situation. You can sometimes avoid repossession and missed payments by talking to your lender ahead of time, but if you miss just one payment, know that you run the risk of losing your car.
Your lender is more likely to work with you if you ask for help before it’s too late, since they don’t want to go through the repossession process either. Depending on your current situation, past payment history, and what your lender allows, there are some options out there that might help you avoid repossession.
Some lenders are willing to let you skip a month’s payment and tack it onto the end of the loan. Another common option lenders may offer is to allow you to skip a payment, but add it to your payment the following month.
The fact is, you aren’t going to know what your options are until you ask, so get in contact with your lender as soon as possible.
How to Get Your Car Back after Repossession
If you reached out to your lender and they weren’t able to help you out, you need to come up with the missed payment quickly. The sooner you can make the payment plus any late fees, the better. However, this isn’t always possible, and you’re going to face repossession if you can’t come up with the cash.
If your vehicle does end up getting repossessed, it’s still possible to get your car back. In fact, there are three options for you to choose from, according to the legal experts at Nolo.com:
- Redeem the vehicle – To redeem your car, you need to pay off the entire loan balance plus repossession fees.
- Reinstate the loan – If your state allows it, and/or it's included in your loan contract, you can reinstate the loan. To reinstate it, you bring your payments up to date, plus repo costs, and continue to make payments. Hurry, though, as reinstatement is typically only available for a short time.
- Buy back the vehicle – You must be informed when and where your car is going to be sold at auction. You’re allowed to attend, and can even buy it back. However, even if you get it back, you still need to pay any difference between the price you paid and the total amount you owe on the loan, including repossession costs.
If none of these three choices work for you, and you find yourself under financial stress, the last resort option is to file for bankruptcy. This option shouldn’t be taken lightly, and you should weigh all possible options before bankruptcy becomes necessary.
The Bottom Line
Always stay on top of your monthly car payment. The best way to avoid repossession is to pay on time each month, but if you run into financial problems, reach out to your lender ahead of time. They may be willing to assist you and find a way to avoid repossession. Even if they can’t, at least you tried and can move on.
If your credit is tarnished due to repossession and you’re looking to finance a vehicle, we want to help. At The Car Connection, we’re teamed up with a nationwide network of bad credit car dealers. Take a quick moment to get connected to one of our dealerships by filling out our auto loan request form.