You may have a few options to explore for your car once a lender has begun the auto repossession process. However, your best bet for stopping a repo is to act before it starts. Communicating with lender beforehand can go a long way toward financing a solution that stops the repossession process.
What Triggers an Auto Repossession?
Repossession is triggered by defaulting on your auto loan. If you're behind on your car loan payment, it doesn't necessarily mean you're automatically in default. The number of payments you can miss, or the number of days you can pay late, before you're considered in default varies by lender.
In some cases, a payment just one day late can jeopardize your loan status, while other lenders may have more lenient policies. The rules your lender sets should be outlined in your auto loan contract. If you're unsure about your lender's policies, talk to them to find out.
Either way, if you're behind on payments, repossession shouldn't come as a surprise. By law, lenders are required to notify you of their intent to repossess, typically in writing.
Stopping Repossession Before it Starts
If you have the option, the best way to stop the auto repossession process is to get current on your loan. This means making your most recent payment that's due, any others you're missing, and any additional charges or late fees.
However, this action can only help you if you haven't defaulted on the loan. If you're not in default, make sure you talk to your lender to let them know you're having trouble keeping up. They might have some options available that you aren't aware of.
Depending on your situation, a lender may allow you to catch up by deferring a payment. Deferment allows the lender to move your missed payment(s) to the end of the loan. This option may also work if you're not yet behind, so make sure to communicate with your lender if you're worried about falling behind.
Another option you may have before you begin missing payments is to refinance your loan. In order for this to be an option, you have to have a good or an improved credit score, be current on your loan, and have equity.
Because you're likely to be upside down on a loan toward the beginning, refinancing usually only works if you've had your loan for a couple of years or more. If refinancing is an option for you, your loan balance and vehicle have to fall within a lender's guidelines.
Options to Save Your Car after Repossession
If you can't avoid default and are aware of the lender's intent to repossess the car, you may have the right to reinstate your loan. Even if your vehicle was already repossessed, reinstating your loan can offer the opportunity to get your car back.
To do this, you have to get current on your loan by making all past due payments, plus paying any fees and charges in one lump sum. In order to qualify for this option, the right to reinstate must be allowed in your state or included in your contract. Also, if you can reinstate, but default again, you won't get this option a second time.
Another option you have after repossession occurs is the right of redemption. In order to redeem your auto loan, you have to pay off the loan – including any fees due to repossession, such as recovery fees and storage costs. The right to redemption only lasts until the lender is able to sell the vehicle, so you don't normally have much time to come up with the money to get your car back.
Finding a More Affordable Option
If you're unable to use any of these options to stop the repossession process, you're going to need to find another vehicle. With a repo on your credit reports, it may be difficult to get a car right away, because typically you need to wait at least a year with a subprime lender.
If you can't, you may be able to finance the vehicle you need through a buy here pay here dealership. This option allows you to choose a used car and get financed all in one place because the dealer is the lender.
If a year has passed, you should find a loan through a subprime lender. These lenders work through special finance dealerships and specialize in helping people who are struggling with credit issues.
Auto Credit Express works with a national network of these special finance dealers. Let us help you find a lender for your situation by matching you with a dealership in your area. Get started right now by submitting our simple car loan request form!