Car Repossession—What Happens When Your Vehicle Is Impossible To Repo By The Bank? If a bank or repossession company cannot repossess your car, there are several different possible scenarios and an array of options that may start to play out.
Ownership and Liability
A vehicle is lost until the loan is 100% paid in full under most vehicle financing agreements. This means that even though the bank cannot repossess the car itself, you are still liable to pay off any debt owed on it\2. However, if you default on payment, then the bank still has the right to sue you in order to recover what it is owed including any fees associated with having your vehicle repossessed4.
Options for Recovery
If your vehicle is in danger of being repossessed, but still hasn’t been taken away, here are several ways you could potentially avoid losing it:
Pay the Loan in Full: This next solution is pretty clear-cut, you pay the full amount of the loan as well as any associated repossession fees. This usually gets your car back before it sold at auction1.
Reinstate the Loan – If you do this early enough, usually by making up the payments and paying some or all of the costs related to being repossessed. So,freedom will allow you to escape the total saving also keep your car3.
Negotiate a New Payment Plan: If you are having trouble paying your bills, ask your lender about establishing another payment plan to both get out of debt5 while still giving you some way to keep your car.
Consequences of Repossession
If you car does get repossessed, several things will happen.
Deficiency Balance – If your car is sold for less than the amount you owe on your loan, it means that you have a deficiency balance. Poor management of this can only lead to more financial stress (14).car repossession (ad)
Credit Score Effect- Repossession causes your credit score to plummet by up to 60–240 points. Such a negative mark can stay on your credit history for seven years, impacting future lending opportunities35.
Worst case legal scenario: If you cannot pay back the deficiency after repossession, the banks can take you to court and cost even more fees and judgments on your name.
Conclusion: Alternatives Are Offered If Bank Cannot Repossess Your Car After defaulting on your car loan, alternative payment solution is provided by the bank. You should know what you signed; and gain knowledge of your rights and obligations under the loan agreement. One last note, however, is that lenders can help prevent it from coming to this in general by being more communicative and understanding when restricted by state laws to repossess.
