Purchasing a vehicle can be a major deal. For some automobile owners, these are major purchases and can be a large portion of one’s monthly income when it comes to payments, insurance, gas and maintenance. Thus, when financial troubles hit, and can feel impossible to meet all the demands it comes with owning a motor vehicle. If one gets behind on payments, this could result in the repossession of their vehicle. This not only leaves an individual in a more difficult position financially but also leaves him or her without a personal vehicle.
In simple terms, repossession is when a bank or leasing company takes a vehicle from a borrower when he or she is behind on payments. This will often occur without any warning given to the borrower. Typically, lenders will send a driver to collect the vehicle or will have a tow truck take the vehicle. In some matters, the lender may be able to disable the vehicle via remote control until the financials are addressed.
While borrowers will receive notifications that they are behind on payments, informing the borrower of the possible consequences, it is unlikely that a lender will alert a borrower that they are coming to repossess a vehicle.
How to keep your vehicle
If a borrower seeks to keep their vehicle, they could do this one or four ways. First, they could reinstate their agreement. This is like hitting the reset button; however, it requires the borrower to get current on payments and pay the repossession costs. Next, the borrower could seek redemption. This requires the borrower to pay off their loan in its entirety, which includes past due amounts, the remaining balance and repossession-related costs.
The third option is to file for bankruptcy. This could stop the repossession process, at least temporary, as it causes an automatic stay on any collection efforts. While this could result in a borrower keeping their vehicle, it could still result in repossession. The Finally, a borrower could bid for their vehicle at an auction. While this will help one get their vehicle back and stop the need to make payments, it may still result in a deficiency balance being owed.
When a vehicle gets repossessed, it can feel as though there are no options. However, there are rights afforded to individuals who have missed payments or have had their car repossessed. It is imperative to understand these rights, as this could help one keep his or her vehicle while also preventing further harm to their credit as well.