Once your vehicle has been hooked up and towed away, you may have a chance to get it back at auction. However, if you win the auction, there are some things to know about buying your repo'd car back.
Buying Your Car Back
After your car is repossessed, your lender is required to tell you when and where it’s being auctioned. Called a post-repossession notice, it’s one of your rights during the repossession process. Your lender is typically required to give you at least a 10-day notice before the sale.
You have the right to bid on your repossessed car at the auction – if that’s what the lender plans to do. Most auto lenders prep a repossessed vehicle for auction, since most plan to use the proceeds to attempt to cover your remaining loan balance. In some cases, a dealer may resell the vehicle privately, but the goal is the same.
Here’s the kicker: if you do have the funds to your car back at auction, you’re still responsible for the auto loan amount. This means you must pay the amount you promised at the auction and repay the deficiency balance of the loan amount to the lender. Your loan balance doesn’t disappear because you won the car back at auction. If you don’t buy it back by winning the auction, you’re still responsible for any remaining loan balance after the auction proceeds are put toward it.
You’re also responsible for any other fees incurred during the repossession process. This typically includes the cost to hire the recovery company to take the vehicle and any storage fees incurred while the vehicle is awaiting auction.
If you do have enough money to cover your entire loan balance and extra repo fees, then buying your car back at auction may be for you. Once you pay everything you owe to the lender, you own the vehicle free and clear.
However, if you don’t have the cash, then it may be a better idea to simply let someone else bid on the car and pay the deficiency balance so you can move on.
What if I Can’t Buy the Car at Auction?
Usually, repossession happens because you defaulted on the auto loan. For many borrowers, this means they simply don’t have the money to repay the loan, win the auction, or buy the car outright.
If you still have your vehicle, but a repossession is soon, you may have a few options to explore:
- Opportunity to cure – Also called reinstating your loan, it means paying back what you owe and resuming your loan. To do this, it usually involves repaying all missed or late payments to catch back up, typically required with one lump sum. Once you’re caught up, you resume paying as normal. Not all auto loan contracts or lenders allow this, so talk to them about your options.
- Voluntary surrender – If you know that repossession is imminent a voluntary surrender can save you money. If you wait for the repossession company to take your car, you end up paying the costs incurred in the process. Many recovery companies charge hundreds of dollars, but if you give up the vehicle yourself, that fee doesn’t appear. Additionally, you get the chance to drop off the car at your convenience and remove all your personal belongings.
The repossession process can be expensive, and leave your credit score in tatters. However, there still are some ways for bad credit borrowers to get auto financing.
Buying a Car After Auto Repossession
Repossession is recorded on your credit reports for up to seven years. A recent repo can make getting approved for another auto loan tough. Most lenders don’t approve borrowers with a repossession that’s less than one year old.
However, there are dealerships that may not check your credit reports, so a recent repo isn't typically an issue in this case. They're called in-house financing used car lots, or buy here pay here (BHPH) dealers. All financing and car buying are done in-house, and many times, the dealer doesn’t request your credit reports.
While a credit check may be skipped, expect to prove your income and residency, provide a down payment, and prove that you have full coverage auto insurance. A BHPH dealer may require a down payment of around 20% of the vehicle’s selling price.
Need Dealer Connections?
At Auto Credit Express, we work to match bad credit borrowers to dealerships that can assist with credit challenges. Not every dealer is signed up with these subprime lenders, but we know which ones are.
Using our nationwide network of dealerships, we’ll look for one in your local area for free. Fill out our no-obligation auto loan request form and we’ll do the rest. Get started today!