What Happens When a Car is Repossessed?

When you lease or finance a car, you don’t technically own the vehicle. Because of this, your vehicle can get repossessed, or repoed, if you stop making payments. What does this mean for you if this happens? Learn what happens when a car is repossessed with the finance center at Westbrook Toyota, and learn how you can avoid getting your vehicle repossessed in Old Saybrook. 

Things You Can Do After Vehicle Repossession 

Your car was repossessed…what happens next? The bank or leasing company takes the vehicle back from the borrower. Here are some of the rights that you have after your vehicle gets repossessed: 

• If your car is going to be sold at an auction, then you have to be notified by the bank. You might be able to buy the vehicle back at the auction for the owed amount. You may also have to pay repossession and storage fees on top of the auction amount. 
• It will depend on the lender, but in some cases, you may be able to reinstate the auto loan by paying off the number of late payments and repossession fees. 

How Does Repossession Affect Your Credit?

If your car was repossessed, what happens next with your credit? Car repossession stays on your credit record for seven years. If you try to apply for an auto loan less than a year after your vehicle was repossessed, then the lender will automatically deny it. If you get another repossession within the seven years after your first repossession, then the negative impact on your credit only worsens. For more car-buying information and consultation, visit Westbrook Toyota near Clinton or online. 

Voluntary & Involuntary Repossession Meaning

Now that you know what happens when a car gets repoed, it’s important to understand the meaning of voluntary and involuntary repossession. Unlike what you might see on television, most repossessions are actually done voluntarily. Voluntary repossessions are done when you call the lender or leasing company and tell them to repossess your vehicle because you can’t make payments on it. Involuntary repossession occurs when the tow truck shows up and tows your vehicle. Either way, your credit will still be negatively affected. 

Deficiency Balance Meaning 

When the bank sells your vehicle at an auction for more than what you owe, then you are actually entitled to the difference. However, if your vehicle is sold at an auction for less than what is owed on the vehicle, then the lender can actually go to court and get a deficiency judgment against you. This means that you’ll be responsible for paying the difference. For payment information and financing options during your Madison car-buying experience, visit our finance center at Westbrook Toyota.

Learn More at Westbrook Toyota

Now that you know what happens when a car is repossessed, you can learn how to recover if it ever happens to you. To avoid any chance of repossession and more, visit Westbrook Toyota in Westbrook or contact us online to answer any of your questions.