There are rules that lenders have to follow when moving forward with a repossession – and you have some responsibilities as well. The repo process can get complicated, so it’s important to know what’s right and what your rights are.

Things to Know About Repossession

Little-Known Facts Surrounding Vehicle Repossession Each state has its own rules and regulations when it comes to repossessions. In many states, a lender can repossess a vehicle without telling you the time or place, and even take the car right out of your driveway. Many borrowers think that their car is safe on their property – but unless it’s locked away, it can be towed away by a recovery company in most cases.

However, according to the legal site, a repo company can’t “breach the peace” while taking your car. This can include towing away your car while you’re in it, using law enforcement to assist in taking the vehicle, or break/unlock locks or destroy property in an attempt to get to a car.

Here are seven little-known facts about car repossession:

  1. You agreed to a repossession process – Signing an auto loan contract almost always means agreeing to allow the lender to repossess the vehicle if you fail to pay or break the contract another way.
  2. Your car can be repo'd for lacking insurance – If you remove the auto insurance from your vehicle, or lower your coverage below the lender’s requirements, they can repossess the car. A lender may also instate a force-placed auto insurance plan and add the payments to your auto loan payment if you drop coverage.
  3. A lender can get a court order – If you manage to keep your vehicle away from the recovery company, or they’re unable to tow it away, then your lender can likely get a court order.
  4. You can voluntarily surrender your car – If you know that your lender is about to repossess the vehicle, then you can opt to return it yourself. This can save you money and make the process less of a hassle.
  5. Repossession scars last on your credit – A repo can hurt your credit score for up to seven years. The first year after the repossession, it may be difficult for you to get approved for another car loan with most auto lenders. However, over time the impact of the repo lessens, and you can typically finance again after one year.
  6. Military borrowers – According to, if you’re in military service, a creditor must get a court order before they can repossess your vehicle. For this to be legitimate, you must have paid at least one car payment and signed the loan agreement before you entered the military.
  7. Auto lenders can’t keep your personal belongings – After a car is repossessed, you have the right to recover your things in the vehicle. The creditor or recovery company isn’t allowed to keep or try to sell your personal property. If some of your things are missing or lost after the car was repo’d, then you may be able to make a counterclaim for damages.

Repossession is serious business, and can drastically lower your credit score. If you think your car is about to be repo'd, then contact your lender right away about your options if you want to keep your vehicle.

What Happens After a Repossession?

After repossession, the car is typically stored until it’s put up for auction. Auto lenders usually sell repo’d vehicles in an attempt to cover your remaining loan balance. You also have the right to attend the auction and try to win your car back, if you wish. The lender is required to notify you about the time and place of the auction if it’s happening.

If the vehicle is sold and you didn’t win the auction, the proceeds from the sale are put toward your loan balance. Anything balance left, called the deficiency balance, is your responsibility to pay. The lender also typically adds the cost of hiring a recovery company and the storage fees to your deficiency balance as well.

Can I Get Another Car After a Repo?

There are dealerships able to assist borrowers with a repossession on their credit reports. For at least one year, you may have to get a car through a buy here pay here dealer, since they often skip the credit pull. Other bad credit auto lenders, such as subprime lenders signed up with special finance dealerships, may be able to assist you with a car loan after one year has passed after the repossession.

Here at Auto Credit Express, we’ve dedicated over 20 years to assisting bad credit borrowers in their car-buying journey. Using our nationwide network of special finance dealerships, we connect borrowers to dealers in their local area. Fill out our free auto loan request form, and we’ll look for a dealership that can assist with poor credit situations.