Car repossessed? Here’s how to get it back

If your car has been repossessed, you may feel like it’s gone forever. This is not necessarily true in some cases because it is possible to recover it. However, it might take time and money to do so. Here’s how.

How to get your car back after repossession

American Buick car loaded onto a tow truck. | Getty Images

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If your car has been repossessed, you may need to gather some money and call the lender to see how you can get the car back. According to Credit Karma, the laws for getting your car back may vary from state to state, but here are some possible ways to get it back:

  • Reinstate car loan: Depending on your state, your auto lender may allow you to reinstate the auto loan if you have enough money to pay the overdue amount. The lender will be able to tell you how much you owe on the loan and give you a schedule for paying the amount. Just note that if you are able to discount the loan, it could help ensure that you can make the payments in the future.
  • Repay your car loan: Another option would be to redeem your car loan. In this case, you will pay the full amount of the loan, including the overdue amount and the board fees. Just be prepared to shell out a hefty amount of money if you go this route. But if you can afford it, you won’t have to worry about monthly payments in the future, which is a good thing.
  • Buying the car at auction: After your car is salvaged, the lender usually sends it to an auction to recover their financial losses. If you really want the car back, you can choose to buy it back at auction, but again, be prepared to provide the money to do so.

The cost of repossessing your car

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The total cost of repossessing your car can vary. It also depends on whether or not your lender sells your car and for how much. For example, if the lender sells the car for $5,000, but you owe $7,000, you will still be responsible for the additional $2,000 plus repossession costs. This is called the “deficiency balance”.

However, if the lender is able to sell the car for more than $7,000, you may be entitled to the excess less repossession costs. In the event that you are unable to pay the balance owing, the lender may collect the amount and send it to a collection agency. Credit Karma notes that both collection account and repossession will appear on your credit report. In the worst case, the collection agency may take legal action against you to recover the money owed.

Preventing a repossession is essential

A small car is towed in England.

A small car is towed in England. | Scott Barbour/Getty Images

If your car has not been repossessed but is likely to be, there are some precautionary steps you can take. Experian recommends contacting the lender first if you think you’re going to miss a car payment.

By contacting your lender, you may be able to explain your situation and get a modified loan plan or even suspend payments. Another option would be to refinance the car loan through another lender. Doing so will wipe out the existing loan with another, but the new one might come with lower, more manageable monthly payments.

Either way, it pays to stay on top of your loan payments to keep your car in your possession. Ultimately, a repossession can hurt your credit and your daily life, but luckily there are ways to get the car back if the inevitable happens.

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