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Car Repossession

If you are like most Americans, you depend on your automobile for nearly all of the everyday things you do. Whether it's driving to work, taking the children to school, or running various errands, you depend on your car to be able to get to everywhere you need to be, when you need to be.

If you have fallen behind with your monthly car loan payments, you should know that the creditor can legally repossess your vehicle, sell it either outright or at auction, and pocket the proceeds. So it is very important to contact your car loan company as soon as possible to try and work out a payment plan so that you won't be stranded without convenient transportation. In certain states, if you don't maintain the required auto insurance coverage, your car can also be repossessed.

As soon as you know you're going to have to make a late car payment, contact your creditor and explain the situation. It's much easier to deal with a loan company upfront and attempt to prevent repossession than it is to dispute it later on. Here are some suggestions on what to do:

  • Call your loan company as soon as possible. Most creditors are willing to work with customers who they feel are honestly trying to handle the situation responsibly and will be able to make the payments, even if they are late.
  • Try to negotiate a revised payment schedule. If your financial problems are temporary, do what you can to get through the rough period without losing your vehicle.
  • If you can re-negotiate your original loan contract (lower interest rate, longer terms, etc.) this can reduce your monthly payments. Remember to get everything in writing and read and understand the new contract before signing it.

If your vehicle is repossessed, here is some important information you should know.

  • Your creditor can keep the vehicle and try to recoup some of the loss by selling it either through a private sale or a public auction. You are not entitled to any of the profits from this sale.
  • You may be allowed to buy back your vehicle by paying the entire amount owed on the loan- including the past due amount and any expenses related to the actual repossession. These can include storage fees, costs of preparing the car for sale, and attorney's fees.
  • Some states have laws which allow you to reinstate your car loan. Check with your state's consumer protection agency for more specific details. Under this scenario, you are required to pay the full past due amount plus any repossession fees.
  • A creditor may not keep or sell any personal property that was in the vehicle at the time it was repossessed.