You might only be avoiding the repo man by one step if you find it difficult to make your auto loan payment each month. But, how long can my car be repossessed?
Most lenders typically begin the repossession process as soon as you are in default, which is typically at least 90 days past due on a payment. Your loan contract’s language may determine when the loan is actually deemed to be in default. The process of repossession, however, might begin the day after a late payment, depending on your lender.
When Will My Car Be Repossessed?
Your situation determines the repo timeline. How long passes from a loan default to a repossession is not a fixed period of time. Most people mistakenly believe that you must miss three payments before you are in default on your loan. However, this is a myth. In reality, one day after you miss your first payment, a lender may legally reclaim your car. But it all depends on the guidelines set forth by your lender and the terms of your auto loan agreement.
Buy here pay here (BHPH) dealers are more likely to have a recovery company on call to hasten the repossession process when a customer stops paying because they are known for not performing credit checks and catering to consumers with lower credit scores. When you finance through a franchised dealership or a larger chain, there may be more time for approval.
Can You Stop a Vehicle Repossession?
Even though your lender may not be required to inform you that a repossession is imminent, you’re still likely to hear from them once you’re 30/60/90 days past due. It might be hard to imagine, but your lender probably doesn’t want to carry out the repossession process either. They would prefer that you were actively making loan payments because it is an expensive and time-consuming process for them.
In times of financial hardship, some lenders provide deferment programs for borrowers. This involves pausing one or more payments, which are then usually added to the loan’s back end. Lenders occasionally might also be open to negotiating in other ways. Some may change the loan’s terms or move the payment deadline to a time that is more convenient for your pay schedule.
A different option to consider is refinancing. When you refinance, you take out a new auto loan on the same vehicle in place of your existing one. The majority of borrowers refinance in order to reduce their monthly payments by either lengthening the loan term or lowering the interest rate. You may be able to avoid a repossession if you are approved for refinancing and are successful in getting a lower monthly payment.
Can You Get Your Car Back After a Repo?
The sooner you take action if you believe you are headed for repossession, the more likely it is that you will be able to find a solution. Even if you can’t avoid repossession, there’s still hope. You will probably receive documentation from your lender detailing the steps to take in order to recover your vehicle after it has been repossessed. If you have the money, you usually have a few options for getting your car back.
You may have the choice to reinstate your loan, redeem your loan, or place a bid on your car at an auction. In some circumstances or states, not all options are available. Always review your contract, and discuss your options with your lender.
Consider applying for a different car loan if you believe you are headed toward repossession and refinancing your car is not an option for you. Continuing to make payments on an auto loan that is close to going into default can harm your credit, and having a repossession appear on your credit reports can limit your ability to get loans in the future.
Try Trading in for a More Affordable Vehicle
If you are not eligible to refinance, you have options. Even if you can’t qualify for refinancing, you don’t have to put up with an unaffordable vehicle payment. Trading in your overpriced vehicle for a more reasonable one is the next possibility to consider.
Using your current car as a trade-in will help you avoid the additional credit score hit that comes with a repossession. If your car has enough equity, you could use the money left over to pay off your current auto loan and put a down payment on a more reasonably priced car. As long as you’re working with the best lender for your situation, it’s possible to obtain a dependable, affordable car even with bad credit.
Last, How Long Can My Car Be Repossessed?
It’s unfortunate that you can no longer afford your car loan payments, but at least you’re making an effort to accomplish something positive while you still have the car.
Before the repossession process begins, you typically have between 30 and 90 days. The repo men will then start looking for your car.
In order to determine whether the lender will cooperate with you, it would be honest to inform them of your situation. If they aren’t, keep in mind that both a forced repo and a voluntary repo harm your credit in the same way. You can use the car to look for a job, but don’t wait so long that you end up in legal trouble on top of your financial difficulties.