It's Friday, and you have big plans for the weekend. Other than visiting your parents, you want to take your kids to enjoy the ocean breeze. You walk to the parking lot, ready to go home to prepare. Your car is not in a spot where you had parked it. You look around, and the reality dawn on you, the repo agent repossessed the car. You stand there confused while the events of a few days ago flowing through your mind. The repo agent had called you threatening to repossess your car since you had not made that month's payment and had not bothered to talk to them. Out of your arrogance, you had told them to do their worst. Now you are here stranded, where do you start?
How to Know If The Lender Will Repossess The Car
How do you check if your car repo list? You need to understand first what would make your car get repossessed in the first place. In most cases, default to pay on time is the main reason. Some lenders may call you and inform you that they intend to repossess the car since you have not paid on time. Some will even give you the grace period to clear your balance. Some will not inform you. They will contact the repo agent to tow the car. So once you default to pay the loan and fail to convince the lender to extend your repayment period, then your car automatically gets into a possession list.
How to Avoid Repossession
Assuming you have lost your job or the pandemic has made it hard for you to make your payment. Maybe you are considering hiding the car. After all, they can't repossess a car that is not available. Though that's a short term solution, the long term effects may hurt you dearly.
Note that hiding the car from the repo man is a crime in many states. If the lender goes to court and proves that you hide the car from them, you may face the law. Again the repo man will bill a huge fee to the bank. The bank will automatically add the fee to your loan. It also creates a negative image in your credit score. Other lenders will not be interested in lending to you in the future. Now that hiding is not a good option, what should you do?
1. Inform the lender in advance - Having a good relationship with your lender is healthy. Visit him in advance and table your case. Notify the bank when you intend to pay. Reach an agreement. They can still repossess the car, extend the repayment period, or even decide on other repayment ways.
2. Sell your car - This car can be tricky; car dealers can help you go around it. But again, you have to compare the market value of your car with the remaining loan balance. If the market value is high, resell the car, clear the balance, and pocket the rest.
3. Refinance your car - Why don't you get lenders who will give you the money at a cheaper interest. The new lender can allow you to pay a small amount over an extended period.
4. Buy old car - New cars are costly. Again, buying a car isn't an emergency. Why don't you save and buy a used car? You can pay cash and avoid bank loans. Meanwhile, ride your bike to work and back.
5. Surrender the car - Repossession affects your credit score for the next seven years. But it gets even worse if other creditors know that you had refused to surrender it. So, avoid the problems and surrender them.
How Do You Repossess It?
What happens after the lender repossesses back the car? He may decide to sell it through auction or even keep it. Unfortunately, when selling at the auction, he will sell it at a lower price. That may not cover the balance. That means you will still have to clear the loan of a car that you don't have. So, now that my car got repo, how do I find it?. Check the options below. They include-;
1. Pay balance - In most cases, the lender will sell the car at the auction after thirty days. Before then, contact the lender and request to pay the outstanding balance and the repossession fee.
2. Clear the loan - After repossession, go to the lender, clear the whole loan. Then pay the repossession fee and the storage fee as well. This option could be tricky if you failed to pay due to financial constraints.
3. Go to the auction - You have the right to know where and when the auction will take place. You can bid for the car, and if you are the highest bidder, you will be lucky to have the car. That doesn't mean that you are exempted from clearing the loan balance or paying the repossession fee.
4. Fill for bankruptcy - The last; worst option would be filing for bankruptcy. Eventually, this option could end up being mostly costly. Think of the legal fee and how long the case can drag in court. Also, the impact on your credit rating for the next ten years will be terrible. Surely, is that even worth it?
Note that you should also know your rights. If you had locked the car in the garage, the repo man has no right of breaking into your garage. Though he can possess it from the open garage, driveway, or even highway, he should not use violence. In case of a breach of peace, your lawyers can help you seek legal redress.
Instead of a headache and the stress that the repo man will repossess the car, why don't you pay on time? If you can't afford a new car, consider using a used or even riding a bike. In case of any eventuality, speak to the lender in advance and make arrangements. If the lender fails to give you a grace period, surrender it willingly and look for the balance before the auction. If the auction day comes, walk to the auction room and bid or even bid online. In all the options of repossessing the car, be ready to pay for the repossession fees.