Vehicle Repossession Explained

Vehicle repossession occurs when you fall behind on your vehicle payments and you cannot come up with a viable financial arrangement with the vehicle lender. The lender has a legal right to take the vehicle from your possession because it was used as collateral for the loan. 

Repossessing the Vehicle

Although most vehicle lenders are not required to assist you, many will try to work with you to come up with a solution regarding your overdue payments. When a solution cannot be reached, the lender will have your vehicle removed from your possession. This may occur during the day or at night and is usually outsourced to a towing company or other private firm that specializes in repossessions. The lender or private firm has a legal right to be on your property to take the vehicle, but it cannot use physical force or threats or remove the vehicle from a garage that is closed without your permission. 

Deficiency Judgments

Once the vehicle has been repossessed, most lenders will sell the vehicle at a private or public auction. If a vehicle sells for less than the balance of the loan, the lender may sue you for the remaining balance. Many states allow this practice, which is known as a deficiency judgment. 

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