How to get your car back after repossession

If your car’s been repossessed, the good news is that you may be able to get it back. The not-so-great news? It takes time and money.

Your lender can take your car if you break the terms of your auto loan agreement, like missing payments or — in some states — failing to get enough car insurance. If your car hasn’t been repossessed yet but you’re financially squeezed, reach out to your lender immediately. It may be able to work out a more affordable payment plan with you so you can avoid a car repossession.

If you’ve been visited by the repo man already, you may be able to get the car back by catching up on missed payments, paying off the whole loan plus repossession costs or bidding on your car at auction. Read on for ways you may be able to get a car back after repossession.

• Can I get my car back after a repossession?
• How much will I have to pay after a repossession?
• Can I get my personal property back after a repossession?
• Next steps after a car repossession

Can I get my car back after a repossession?

A car repossession can be a double setback — it leaves you without a way to get around and can damage your credit. You may be able to get your vehicle back, but you’ll likely need to come up with some cash first. Contact your lender to understand your options. State laws vary, but here are some options you may have.

Reinstate the loan

In some states, you may be able to reinstate your loan, which means bringing the loan current by paying the past-due amount, plus any costs associated with repossession, like towing and storage fees. The lender should tell you how much is due and give you a timeline to pay it, typically 10 to 20 days after your vehicle was repossessed. 

Depending on your financial situation, you may or may not be able to get enough money in such a short time frame. Before you try to gather the cash, consider whether you’ll be able to afford the car moving forward, taking into account both car payments and ownership-related expenses.

The average annual cost of owning a small sedan is about $7,114 per year, according to AAA’s 2019 Your Driving Costs report. If you own a large sedan, medium SUV or pickup, the annual cost rises to more than $10,000. If your budget is too tight to fit loan payments, insurance, fuel and maintenance, you could wind up in this situation again down the road.

Redeem your loan

Your lender may also let you redeem your loan, which means you pay the full amount you owe. Be prepared to cover your past-due payments, the remaining balance on the car loan and any costs related to the repossession, such as towing and storage. Ask the lender for the payoff amount and a list of the repossession costs.

This option is more expensive than reinstating the loan, since you’re paying off the outstanding balance with a lump sum. Once the loan is redeemed, you won’t have monthly payments. But you’ll still need to insure and maintain the car, so consider whether you can afford these costs before going this route.

Buy back your car at auction

If neither of these options works for you, your lender may keep the vehicle as compensation for your debt or resell the car to recoup its losses. 

In some states, your lender must let you know about its plans. If the lender plans to sell the repossessed car at a public auction, it may be required to tell you the time and place so you can attend and bid on the car. The same goes for a private sale — the lender may need to disclose the date of the transaction.

How much will I have to pay after a repossession?

How much you have to pay after a repossession depends on whether the lender sells your car and how much it gets in the deal.

If your lender sells your car for less than what you owe, you may have to pay the difference. This is known as the “deficiency balance,” and it includes the remaining loan balance, missed payments, interest and any repossession fees. For example, if you owe $7,000 on the car loan and the lender sells it for $5,000, you’d be on the hook for paying the $2,000 difference plus any loan fees you owe.

If the lender sells the car for way less than its fair market value, this could be a sign that the sale wasn’t done in a “commercially reasonable manner,” and you may be able to dispute the high deficiency balance in court. On the flip side, if the lender sells your car for more than you owe on your loan, plus any repossession costs, you’re entitled to the surplus.

Your financial situation could take a turn for the worse if you can’t pay the deficiency balance. The lender may charge off the debt or send it to a debt collection agency, which will contact you to get the debt. Both the collection account and the repossession would show up on your credit reports, which can hurt your credit. In a worst-case scenario, the auto lender or collections agency could take legal action against you to get the money.

Can I get my personal property back after a repossession?

In most states, the repossession company must allow you to pick up anything you left inside your car — though you’ll need to arrange a time that works for the repossession company.

Start by checking the laws in your state, then contact the repo company or your lender to ask about the process. In some states, the company may charge you a “reasonable” storage fee, but the Consumer Financial Protection Bureau recommends seeking legal advice if the lender or repossession company demands payment in exchange for returning your personal items.

It’s a good idea to make your own list of what’s in your car, along with estimated values. When you pick up your items, make sure everything’s there and check for damage.

It’s also worth noting that a repossession agent can’t commit a “breach of the peace” when taking your car. If, for example, your garage door was closed at the time of repossession and the repossession company damaged the door by forcing it open, the company may need to pay a penalty or compensate you fairly for your property. 

Next steps after a car repossession

It’s important to know your rights after your car’s been repossessed. If you have questions about your rights or your state’s consumer protection laws, reach out to your state attorney general, state consumer protection office, a local legal services office or a private attorney.

The repossession process can be difficult and could leave you feeling powerless. Take action by focusing on rebuilding your credit. A repossession can stay on your credit reports for up to seven years and cause your credit scores to drop. But making on-time payments, paying down debt and limiting the number of new credit accounts that you open are some of the things you can do to build up your credit.