If you do not pay a repossessed car loan, the vehicle is sold at auction, often for less than the balance owed. You remain responsible for the "deficiency balance" (loan minus sale price) plus repo fees, and the lender may sue you for this amount. A repo stays on your credit report for seven years.
You should pay off a repossession if you want your vehicle back (by paying the full loan + fees) or to avoid a large deficiency balance, which lenders can sue you for, but it won't erase the negative mark from your credit report immediately; paying it off might help you negotiate a "pay-for-delete" or at least stop collections, but your main goal is to stop further financial damage and collection calls.
Four Strategies for Handling a Repossession Deficiency
This is a civil matter, not a criminal one. You won't go to prison for missing your car payments or for trying peacefully to stop the repossession.
A partial payment might buy you a little time, but it will not prevent repossession. The loan is still considered in default, and it's up to the lender whether to cut you some slack.
The time it takes for a car repossession varies from days to months after you default, often starting around 90 days late, but lenders can act quickly, sometimes within days of the first missed payment, depending on the loan terms and your history; there's no fixed timeline, as it depends on lender policy and your state's laws, but it's a quick process once initiated.
Car loan companies can garnish your wages, but they first must obtain a court judgment. If you default on your loan and the lender repossesses your vehicle, they may sell it to recover losses. If the sale doesn't cover the full loan balance, the lender can sue you for the remaining amount.
In most states, your lender can sue you for a deficiency judgment to collect the balance owed, as long as it followed the rules for repossession and sale.
Repossession Affects Your Credit
It is best for you to proactively address the situation and work with your lender to avoid repossession. But, if you have no other options, remember this is not the end of the world, and there are ways to rebuild your credit.
Yes, you can often get your repossessed car back by either reinstating the loan (paying past-due amounts plus fees) or redeeming the vehicle (paying the full loan balance plus fees) before it's sold, or by buying it at auction, but you must act fast as your options decrease once the lender sells it, and you'll need to cover all costs.
How do you get a car back after repossession? Provided you have the money, there are some steps you can take. Unfortunately, once the car has been repossessed, there isn't much you can do to get it back—short of applying for bankruptcy—without paying the outstanding balance.
Repossession: Once a repossession order is enacted, the repo agent could come to your house without notice and take the vehicle. The agent will usually be equipped with a duplicate key for the vehicle but could also enter the car by picking the lock and hot-wiring the engine.
By paying half of your monthly payment every two weeks, you end up making a total of 26 payments per year, which is equivalent to making 13 monthly payments in one year rather than 12. Contact your lender to make sure this is an option and for their assistance in setting it up.
A partial payment can't stop repossession.
Any time you pay less than what you owe, your car could be repossessed. A partial payment may extend the time you have until the repo man comes, but it does not help you keep your vehicle.
The repossession process timeline varies but typically starts after 30 to 90 days of missed payments, depending on the lender and state laws. Once initiated, repossession can occur within a few days to weeks. Lenders usually notify you, but in some states, they can repossess the vehicle without warning.