Has the Bank Already Repossessed Your Car?
If you wake up and your car is gone from your driveway, all is not lost.
Once the car has been repossessed, the lender might allow you to get it back. This is called redeeming or reinstating your repossession. If you are given this option, you'll need to move quickly. The window for getting your car back is short: usually less than two weeks.
Getting your car back won't be cheap, though. Most lenders will require you to pay an amount that brings your loan current (or close to it), along with fees.
If you're unable to redeem or reinstate your repossession, the lender will eventually send the car to an auction for sale. Your financial attachment to the car won't end at the auction, though. You'll be held responsible for the difference between the amount it sold for and the remainder of the loan — as well as repossession costs.
So if you owed $15,000 on a car that is sold at auction for $11,000, not only would you have a repossession on your credit report, but you'd now owe $4,000 plus repossession fees for a vehicle you're no longer driving. And there is a good chance that debt will come back to haunt you.
"In the past, we'd see people with unpaid balances on their credit report from a previous repossession. Those balances would usually be charged off as a loss by the lender," says Paul Scott, a longtime finance manager for Southern California car dealerships. "Now we're seeing lenders garnish the wages of people who've lost their car to repossession. That's how some banks recoup their loss."