Recovery companies are pretty skilled at their craft of locating and towing vehicles away, and they’re used to overcoming the lengths that people take to avoid them. If you do manage to successfully hide your vehicle from the repo man, that doesn’t mean you’ve beaten the lender and that’s the end of it. Here’s what happens if the repo company can’t recover your car.
Hiding Your Car From the Repo Company
Once the repo process has begun, the repo man can take your vehicle from your driveway, your workplace parking lot, or even while you’re out shopping. Typically, recovery companies attempt to find your car for up to 30 days.
Some borrowers attempt to keep their car in a locked garage during the search, which is one of the only places where a recovery company can’t take your vehicle from. Other tactics may include taking off the license plate, parking down the road, and leaving your car at a friend’s house – the list goes on. Unfortunately, repo companies are familiar with these avoidance tactics.
If you do manage to keep your car hidden from the repo company, the lender isn’t going to give up.
If the recovery company can’t find your car, they contact the lender and let them know they are unsuccessful. Next, your lender is likely to take legal action. Your auto lender can take you to court and get an order that forces you to return the car. If you refuse to hand over the vehicle, you may be charged with theft – which is a whole other can of worms.
Trying to hide your vehicle from the repossession company isn’t recommended. The longer the lender has to pay to keep the repo company searching, the more you may owe. And, if the lender takes you to court, expect more fees associated with the court hearings.
If you break the auto loan contract, your lender has the right to repossess the car. Your lender is the lienholder and has a lien on the vehicle that stays in effect until the loan is paid in full. Two of the most common reasons for a repo are failure to pay and lapse in auto insurance coverage.
Here's how a repo typically works:
- The contract is broken – If you miss a payment or your insurance coverage lapses, the lender can begin the repossession process.
- Recovery company sent out – The recovery company typically spends around 30 days looking for your vehicle. They tend to base their search on your known residence and place of employment.
- The car is placed in storage to be prepped for sale – Any personal effects that were in the vehicle are removed, and the car is cleaned and prepped for auction. The recovery company is required to release your personal property to you if you come looking for it, but they don’t typically voluntarily send things back to you, so be prepared if you know a repo is coming.
- Repo'd vehicles typically get sent to auction – Lenders sell repossessed cars in attempts to recover the loan balance. The sale proceeds are put toward your balance, and anything leftover is your responsibility to pay.
In some cases, lenders can start the repossession process as soon as one day after a missed payment. You should also be aware that many lenders don’t give you notice of when or where they’re going to repo the vehicle. But, depending on where you live, they may be required to.
The Cost of a Repossession
If there’s still a balance after the vehicle is sold at auction, it's called a deficiency balance and it’s up to you to pay. Often, the recovery company fees and storage fees are rolled into the deficiency balance, too.
There’s also a non-monetary cost of an auto repossession – the damage done to your credit reports. Repos can drastically lower your credit score. Borrowers with a repossession that’s less than a year old may have trouble getting approved for a car loan with many auto lenders. After a year has passed, your odds of getting approved generally increase, but your credit reports reflect a vehicle repossession for up to seven years.
What Can I Do About a Repossession?
There still may be hope that you could keep your car. If your lender hasn’t started the repossession process and you’re determined to keep your vehicle, then it’s time to contact your lender about your options. Here are a few choices you might have depending on which stage your repossession is in.
- Haven’t missed a payment yet? If you’re still current on your auto loan, but you think you’re going to miss a payment soon, contact your lender right away. Many auto lenders allow borrowers a deferment to temporarily pause payments for up to three months. Those paused payments are usually added to the end of your loan. If you’re already behind on payments, a deferment isn’t typically an option, so act quickly.
- Missed some payments already? – Contact your lender about your options quickly. Some lenders allow the opportunity to cure or redeem the loan. Typically, this involves making up all missed/late payments, or even paying the loan off with one lump sum.
- Lapsed in auto insurance? – Auto lenders require that borrowers maintain full coverage during the entire loan term, and if there’s a lapse, they may take the vehicle back. If your auto insurance was canceled and the lender is threatening repo, contact your insurance agent and work to get the insurance reinstated right away.
A voluntary repo may help. If you’ve exhausted all your options and repossession is going to happen, then a voluntary repossession could save you some money. If you return the car yourself, then you don’t have to pay the lender for the cost of hiring a recovery company. This also means you can return the vehicle at your convenience and take time to clean out your personal belongings. A voluntary repo may also reflect better on you as a borrower for your future auto loans.