More than 1.2 million cars were repossessed in the United States in 2022, according to the Journal of Consumer Reports.1
If your vehicle has been repossessed or you’re at risk of repossession, there are steps you can take to prevent your car from being seized or get it back if it’s already been collected.
Steven Kibbel, a Certified Financial Planner and Chartered Financial Consultant from Franklin, Tenn., who previously worked in auto financing, says that by being proactive, you may be able to minimize the damages of a potential repossession.
“I often saw good people struggle when unexpected hardships resulted in missed car payments,” he says.
When one of Kibbel’s clients lost his job and wasn’t sure what to do, Kibbel was able to modify his loan and lower his payments to fit his new budget.
“This prevented a default and saved his credit score,” Kibbel says.
Here’s what you need to know about repossessions:
How long does it take to get a bank-repossessed car back?
Vehicle repo and your credit score
Where to find resources for your state
Answers to FAQs about vehicle repossessions
- How do I know if my car was repossessed or stolen?
- Can a car get repossessed for no insurance?
- Can they repo your car with you in it?
- How can I fight a repossession?
- Where do banks sell repossessed cars?
- What happens to the possessions inside your vehicle?
How do repos work?
Technically, your lender has the right to repossess your car after you’ve missed just one payment.
However, most lenders will wait until you’re about three months, or 90 days, behind on payments before they take action, says Loretta Kilday, a Chicago-based attorney and spokesperson for DebtConsolidationCare.com. Kilday has worked for more than 30 years in debt collection and bankruptcy litigation.
She says each state has specific laws about how and when lenders must notify borrowers that their loans are in default.
“This gives you a chance to catch up on payments and avoid a repo,” Kilday says.
Generally, the lender will issue a “right to cure” notice after one missed payment to allow you time to pay the past-due amount, Kibbel says.
If you don’t catch up on payments by the third month, the repossession process typically begins. Kibbel recommends reviewing your loan documents to understand your lender's specific policies.
Most repossessions are involuntary, meaning the lender takes away your vehicle because you’ve missed payments on your loan.
However, some car owners surrender their vehicles to their lenders when they are unable to make payments. This is known as voluntary repossession, and may save you money in fees, though both voluntary and involuntary repo will negatively affect your credit.
How long does it take to get a bank-repossessed car back?
In most states, if your car has been repossessed, you have the right to “reinstate” your loan and recover the vehicle, Kilday says. To do that, you’ll have to pay all missed payments, fees, and repo costs within a specified timeframe before your car is sold at auction — typically a few weeks or a month.
Another option may be to “redeem” the vehicle by paying off the loan balance in full before the lender sells the vehicle.
After the vehicle is sold, you can't get it back, Kilday says. “The lender must notify you of the sale and give you a chance to get personal possessions out of the vehicle.”
What to know about repo fees
If your lender repossesses your vehicle, that doesn’t mean you’re finished with your car loan. It actually means you’ll rack up a number of additional fees if you do not pay.
Your financial obligations related to an involuntary repo are likely to total much more than your monthly car payment. You may have to pay some or all of the following fees:
- Towing fees. You'll be charged for the cost of actually seizing and towing your vehicle, typically between $200-500, according to Kibbel and Kilday.
- Late payment fees. Late fees for your missed payments will be added to your balance, which vary by lender.
- Storage fees. You’ll have to pay daily fees, typically $20 to $50 per day, for storing your vehicle after repossession.
- Processing fees. Your lender may charge you repo processing fees up to $300 or $400.
- Auction fees or deficiency balance. If your car is sold at auction for an amount that is lower than your remaining loan balance, you’ll be responsible for paying the difference, also known as a deficiency balance, along with any auction costs. For example, if you owe $10,000 on your car and your lender sells it for $8,000 at auction, you will still owe the remaining $2,000 to the lender. Your deficiency balance may also include other incurred fees you haven’t paid.
- Legal and collection fees. If your lender pursues legal action against you or sends your account to collections, they may also add those fees to your balance.
Vehicle repo and your credit score
“Repossession is one of the worst derogatory marks to have on your credit report besides bankruptcy,” Kilday says.
She says repossession will likely drop your credit score by at least 100 points and damage your credit history for seven years. This will make it much harder to get approved for new loans or credit, and any credit you do qualify for will have very high interest rates, Kilday says.
If you are able to make up your missed payments, pay off any accrued fees, and get your car back, your credit will still be affected, though not as significantly.
If you’ve missed car payments — or expect to miss upcoming payments — it’s best to be proactive rather than waiting until your car is repossessed.
Kibbel says you should contact your lender immediately to negotiate alternative payment arrangements or to request a loan modification that can lower your monthly payment.
He says you can also seek help from nonprofit credit counseling agencies that provide advice and assist with lender negotiations at little or no cost.
“The sooner you take action, the more leverage you will have to avoid repossession and further credit damage,” Kibbel says.
Where to find resources for your state
Because the laws regarding vehicles and repossession vary from state to state, it’s best to seek help in your own state if you’re facing a repo.
To understand your state’s laws, your rights as a vehicle owner, or to report a lender who isn’t following the rules, contact the office of your state attorney general or state consumer protection office.
Answers to FAQs about vehicle repossessions
We address some common questions/misconceptions about vehicle repossessions:
How do I know if my car was repossessed or stolen?
The best way to know if your car is repossessed or stolen is to contact your lender and ask. You could also call your local or state police department, since lenders are typically required to notify authorities about an upcoming repossession.
Can a car get repossessed for no insurance?
In some states, a lender can technically repossess a car if you don’t keep it insured. Most car loans include a stipulation that the borrower must maintain insurance on the vehicle. However, laws vary in each state, and nonpayment of the loan is a much more common reason for repossession.
Note that if your car is repossessed, you will need to show proof of insurance coverage to get your car back. If you are struggling to pay for car insurance, check out our guide on how to lower your insurance premium.
Can they repo your car with you in it?
A repo officer cannot take your car while you are in it, but they can ask or demand that you get out of the car. Repossession officers are not allowed to “breach the peace” to take a car — which means they can’t use violence or threats to get you out of it.
Kilday says that when you protest repossession, officers have to seek actions through the courts to move forward.
“But locking yourself in the car or making trouble to avoid legal repossession will come with serious legal consequences,” Kilday says. Those consequences could include criminal charges or a lawsuit for damages if your actions result in financial losses for the lender.
How can I fight a repossession?
If you think your car was unlawfully repossessed, you will need to hire a lawyer to fight your case.
One way to avoid repossession is to file for bankruptcy before the lender seizes your vehicle. A bankruptcy attorney can help you determine whether this strategy is a good idea for your situation.
Cutting a lock on a gate or breaking into a garage to get to your car are also forms of “breaching the peace.”
Where do banks sell repossessed cars?
Typically, banks sell repossessed cars at auto auctions or online auctions. Some lenders sell repossessed cars directly to the public through their websites or through third-party sites like RepoFinder.com.
What happens to the possessions inside your vehicle if your car is repossessed?
When a car is repossessed, the lender or repossession company has to inventory and store any personal items found in the car in a safe way, Kilday says.
They should notify you about how and when to collect your possessions, generally not earlier than 30 days and during reasonable hours.
You’ll probably have to pay a fee for the storage and retrieval of your personal items. To avoid losing items of value, Kilday recommends removing personal items from your car if you know a repossession is possible.
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SOURCES
- “How many cars are repossessed each year? 2024,” by Alexus Bazen, Michael Dempster, Feb 22, 2024. Consumer Affairs, Journal of Consumer Research. https://www.consumeraffairs.com/automotive/car-repossession-statistics.html#car-repo-statistics
