What Happens when a Car Gets Repossessed?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - July 3, 2019

When a car gets repossessed, a recovery service is hired by your lender to bring it back to them after you default on your loan. The vehicle can be hauled off by this service no matter where you are. However, when the repo man comes, it's just the first step, and there are typically a few opportunities available along the way for you to get your car back.

2 Options to Get Your Car Back

If you hadn't realized by the time the repo happens that there was an issue with your auto loan, this is your wake up call. It's also your first opportunity to get your vehicle back.

At this time, there are two options after repossession to get back your car and get things squared away with your lender: redemption or reinstatement.

1. Redemption

Although the most difficult in terms of finances, redemption is your best bet when it comes to getting your vehicle back. It's surefire because a redemption means you're paying off the entire loan all at once. You're also responsible for paying any extra charges and fees – such as storage fees – that were incurred during the repo.

You can exercise your right to redemption at any time before the car is sold privately or at auction. Your lender is required to notify you in writing with the information you need to redeem your vehicle, so if you don't hear from them within five days after your car was repossessed, contact your lender.

2. Reinstatement

It might be asking a lot to come up with all the money to pay off your loan, especially if you were already having trouble making payments. If you don't have the money to redeem your vehicle, you might be able to reinstate your auto loan instead. A reinstatement is when you make up any payments you’ve missed and any repo fees all at once and agree to continue with the loan going forward.

In order to do this, the right to reinstatement must either be built into your loan agreement or allowed by your state. If your loan doesn't have reinstatement built into it and your state allows it, you may still have the right to do this.

If you can reinstate your loan, you have to contact your lender for a reinstatement quote. You should be provided with a notice in writing of the cost to bring your loan current. Typically, you're only given 15 days from the date of the notice to pay the total amount.

One Final Chance to Reclaim Your Car

When you can neither redeem nor reinstate your car, there's one final opportunity to take possession of the vehicle you lost: when the car goes up for sale at auction.

Repossessed vehicles are typically either sold privately or sent to auction. If the car is being sold at auction, the lender is required to let you know when and where it's taking place so that you have an opportunity to bid on the vehicle.

Keep in mind that whether you win or lose the bid at auction, you're still responsible for paying the lender any repossession-related costs, as well as paying off any of the loan balance that wasn't covered by the sale of the car.

If You're Unable to Get Your Car Back

If you weren't able to regain possession of your vehicle and you need another one, it can be difficult to know where to start now that you have a repo listed on your credit reports. Repossession can be difficult to work your way back from if you need a loan in order to get another car. The good news is that you can get auto financing again after repossession with the right lender.

It's generally best to wait at least one year after a repo to apply for a car loan as, in most cases, this is the only way to get approved. Waiting as long as possible gives you time to improve your credit score and save for a down payment, which you're likely going to need when you get a bad credit auto loan. Once you're ready, we're here to help.

At CarsDirect, we help thousands of people just like you find dealerships in their area that work with the lenders necessary for financing with bad credit. We want to help make your car loan after repossession as painless as possible.

To get started, fill out our easy and free auto loan request form and we'll get to work for you!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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