My Car Was Repossessed, What Happens Next?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - September 25, 2019

Once your car gets repossessed, not only do you lose your vehicle, your credit score is negatively impacted. A repo can stay on your credit reports for up to seven years, but just because you lost your car doesn’t mean you can’t finance one again.

What Happens when a Car Gets Repossessed?

Once you miss a car payment, you’re at risk of repossession. When this happens, the lender hires a recovery company to take your vehicle. They can take your car if it’s out in the open – even on private property – and repossess it. What they can’t do is take your vehicle by breaching the peace; meaning they can’t use force to seize your car, such as by opening a garage or any closed area. If they do, they’re breaking the law.

Besides obviously losing your vehicle, what else happens? As we mentioned, repossession negatively affects your credit score. How much your score is going to drop depends on where it is at the time of repossession. If you started out with good credit (over 700), your score could drop by around 100 points, and put you in a different credit scoring tier.

Getting Your Car Back after Repossession

Did you know you could get your car back after it’s been repossessed? Well, it’s true. However, not everyone is able to do this, and your options may be limited as to what you can and cannot do to get your vehicle back.

are three different ways you can attempt to get your car back after repossession:

  1. Reinstate – To reinstate your auto loan, you need to bring your loan current by paying all amounts owed, plus repossession and late payment fees. Not every state allows this, and even if your state does, your lender may not; read your loan contract carefully about this.
  2. Redeem – To redeem your vehicle, you need to pay the loan balance in full in one lump sum, plus any additional fees relating to the repo.
  3. Buy it back – The lender must send you a letter explaining where and when your car is going to be auctioned. You can attend and bid on the vehicle. Keep in mind that even if you do end up buying it back, you’re still responsible for any amount owed that wasn’t covered by the sale as well as repossession and storage fees.

If none of these three options work, a last resort option – and one we don’t recommend except in the most dire of circumstances – is to file for bankruptcy. When you file for bankruptcy, an automatic stay is activated and temporarily prevents the lender from selling the vehicle. Only do this if you’re truly struggling with your finances – not just your car loan – and you determine that all other options aren’t feasible.

Can I Get an Auto Loan after Repossession?

Just because your car was repossessed doesn’t mean you can never finance another vehicle again. What you need to do is take active steps toward improving your credit post-repo, and apply for financing with the right lender.

You should be looking into a subprime lender, although you typically have to wait a year, or buy here pay here dealer if you need a car right now. Both specialize in bad credit auto financing, and we can point you in the direction of one near you.

At CarsDirect, we work with a nationwide network of special finance dealerships that have the lenders you need for your next car loan – even if you’ve dealt with repossession. Getting started is simple. Just fill out our easy, no-obligation auto loan request form and we'll get the process of connecting you to a local dealer started.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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