6 Steps to Get Back on Your Feet After a Car Repossession

Having your car repossessed can leave you feeling helpless. But there are many ways to recover after car repossession and get you back on your feet. These situations can be a major inconvenience. You likely depend on your vehicle to get you to work, school, the grocery store, or other important appointments.

The first thing you should know is that you’re not alone. Every day more than 5,000 cars are repossessed in the United States. According to the Federal Reserve Bank of New York, auto loan default rates are more than 30 percent. As economic times become more challenging car repossession can happen, even to those who had historically been able to keep up with their payments.

What is a car repossession?

Typically, when you purchase a new vehicle you take out a loan to pay for part or all of it. At that time, you signed an agreement with the lender to get a loan which holds you legally accountable for making monthly payments on the vehicle. If you miss a payment the lender who gave you the loan has the right to repossess your car.

If you have missed a payment make sure you are talking to your lender. 

A missed payment is one that is more than 30 days late. It takes time, money, and effort to repossess a car. So, although the lender has the right to repossess the car after only 30 days, they typically won’t repossess it after missing just one payment. Most lenders will proceed with repossession after a borrower misses two or three consecutive payments. And these lenders move forward with repossession if they haven’t heard from the borrower. Lenders do not want to spend a lot of time trying to contact the borrower. So, if you have missed a payment make sure you are talking to the lender. 

What are the steps taken for a repossessed car?

Laws on repossessing a car vary by state. In Oklahoma, a lender can repossess your car at any time after a missed payment. The lender does not need to provide you prior notification to take possession. Repossession companies can come onto your property to repossess the car at any time; however, they are not permitted to cause any damage during the repossession process.

For example, if your car is parked on the street or in a driveway, they can tow it away. However, if your car is secured in a garage, they cannot cause damage and enter the structure to repossess the car.

If you suspect your car is about to be repossessed your instinct may be to lock it in a garage to avoid the process. This tactic will draw out the process and could lead the lender to pursue legal action against you in the form of replevin, making the situation worse. Although a repossession is hard to face trying to hide your car will not benefit you in the long run.

Once repossessed the lender will then have the vehicle sold at auction to recoup as much of the balance on the outstanding loan that they can. The lender will provide you notification of the time and place they will be selling your car.

Getting help after car repossession


How do you avoid car repossession?

The best way to avoid having your car repossessed is to talk to your lender before it happens. It is easier for you to work with the lender to prevent your vehicle from being repossessed than to dispute it after repossession has occurred.

If you are facing challenges making payments do not wait, contact your lender immediately. Vehicle repossession is time-consuming for the lender and many will work with you to avoid going this route. Also, by working with you the lender avoids hiring a repossession company that will charge them for towing the vehicle and daily storage fee, which can run hundreds of dollars a day.

This proactive approach will indicate to the lender that you are open to developing a plan to move forward and bring your payments up to date. Lenders will typically provide a few options for your consideration including refinancing your loan, looking into a deferment or developing a new payment option.

  • Restructure your loan. Your lender may be able to refinance your loan to extend the term length and lower your monthly payment amount. You can shop around to various lenders to obtain the most favorable rates. A lower interest rate or an adjustment on the loan terms may allow you to keep up on payments.
  • Defer a payment. Vehicle repossession is timely and inconvenient for the lender and you. If you are proactive about the situation, they may be willing to defer payments for a designated period of time when you are better able to make payments. A loan deferment is when the lender allows you to pay a lower loan payment, or not make a payment, for a designated period of time. This amount is still added to your loan, but it can provide short term relief.
  • Trade-in your car for a more affordable option. If your car payments are too high, it may be time to consider trading it in for a less expensive model. You might want to consider trading in your car, particularly if the vehicle is worth more than the remaining balance on your auto loan. If you have equity in the vehicle, trading it in will allow you to pay off your current loan. Then, use any remaining balance as a down payment towards a new lease or purchase. We have made the car buying easy through our system. A trade-in could bring down your monthly expenses and help you avoid being hit with a repossession on your credit reports.
  • Sell your car outright. By selling your car you can pay off your loan. Keep in mind that if the car sells for less than what you owe, you will be responsible for paying the difference to the lender. There are more costs associated with owning a car than just the loan payments, you need to budget for maintenance, insurance, and gas. You can save money on car payments and gas by depending on friends, family, public transportation, biking, walking, or using Uber for rides. Although this may not be a long-term solution it could provide a few months of reprieve from car payments allowing you to repay debt or save for a future car.
  • Voluntary repossess your car. Voluntary repossession is when you avoid lender repossession by voluntarily turning in the car. This option may be a last resort, but it is a better option than the lender coming after your car. One benefit is that the creditor may be a little more lenient because they won’t have to go through the hassle and expense of hiring an auto repossession company. These fees also won’t be passed onto you, saving you a little money in the end. However, the lender will report the repossession (even if voluntary) to the credit bureau so this option won’t help your credit.

How do you recover after a car repossession?

1. Speak to your lender

If your car is repossessed, you should immediately call your lender. If you don’t know why your car was repossessed, they can help you sort out the details.

There are some situations where a lender didn’t have the right to repossess your vehicle. If you believe you are a victim of a wrongful repossession be sure to have your loan agreement outlining the terms of default. Read over the documents to understand your rights and the lender’s role in the process. Before calling the lender, pull all your records and documents for payment amounts, dates, forms of payment, and account information.

A phone conversation can help provide a quicker resolution than avoiding the problem.

If your car was repossessed due to missed payments taking a proactive approach is still a good course of action. Many lenders will try to work with you to help you resolve the situation. A phone conversation can help provide a quicker resolution than avoiding the problem. Dodging the problem doesn’t help because the lender is unable to help if you don’t speak with them. Especially when you are a member at Focus Federal Credit Union. We take pride in being available to our members and helping them through these situations. 

2. Determine if you can get your car back

The lender will typically allow you to get your car back before they take it to auction if you pay outstanding payments or pay back the loan in full. If you have a family member or friend that is willing to give you a personal loan for the balance due this is an easier path to getting your car back and back on the road.

If you’re unable to pay back the loan in full many lenders will work with you to reinstate the loan and adjust the payment schedule or monthly payment amount. Your lender may be willing to set up a new payment plan allowing you to catch up on your missed payments and making a plan for future payments.

3. Recover your personal property left in the car

If you are unable to get your car back, you are entitled to recover the personal possessions that you left in your car. Your lender is required to provide reasonable safety to access personal items left in your car. The creditor should provide you ways to retrieve your items. Cars typically go to auction within 30 days. You will need to act fast to recover your personal items before the auction. If there are personal items that were left in the car that the lender cannot account for you can take legal action. If you have customized your car with rims, suspension, or audio equipment they are considered part of the car and not recoverable.

4. Pay outstanding debts

If the lender sells the car at auction this doesn’t mean you can just walk away, you may still owe the lender money. If the lender is unable to sell the car for more than the amount owed, you will be liable to pay the difference. For example, if you owe $13,000 on your car loan and the lender sells it at auction for $9,000 you will need to pay the remaining $4,000. You will also owe money for all missed payments, repossession expenses, towing, and storage fees.

5. Make a plan

When your car is repossessed due to late payments the lender will notify the credit bureaus of the repossession. If you owe outstanding fees the lender can take you to a collections agency to recoup the additional fees. The car repossession and collections will remain on your credit report for up to seven years.

To obtain credit in the future you will need to be proactive in improving your credit. To do this you should pay your bills and make all debt payments on time and in full. Having good credit is an important part of your financial freedom. Even if you have had some hurdles in your credit history it is never too late to make changes and start rebuilding your credit.

6. Ask for help

Now is a good time to evaluate your expenses and where you can make cuts. If you do decide to buy another car assess how much you can afford monthly on gas, maintenance, and loan payment. If you are having difficulty paying other bills consider getting financial help. At Focus Federal Credit Union we offer every member access to a Financial Services Representative. During these meetings, our representatives sit down with members and assess monthly budgets. They work with you to make plans to rebuild credit and think of the future. 

There are organizations that can assist with getting you back on the road. Check local churches and nonprofits that may offer assistance to community members. Other organizations may be able to assist you:

  • United Way. United Way’s 2-1-1 program provides various support services. If you’re struggling to afford a vehicle, they may be able to help.
  • Cars 4 Heroes Inc. This nonprofit’s mission is to provide free, reliable transportation options to veterans, first responders, and their families.
  • Goodwill. Some people donate used cars to their local Goodwill that then get sold to people in need. Speak to your local Goodwill for further information.

A car repossession can be a major setback, but there is a path forward. Consistently paying bills and debt will help rebuild your credit. If won’t happen overnight but there is a way to recover from a car repossession. If you have found yourself close to repossession contact Focus Federal Credit Union in Oklahoma City and one of our representatives would be happy to help you get back on your feet.