I have included some general information about repossession. In most states, the bank can technically repossess your vehicle as soon as your late on any payment (if you tell me what state you’re in, I can find you the exact legal regulations). However, this is not cost effective, because it is a lot of hassle to pay someone to repossess your vehicle.
Your bank does not want your car, they want the money. More than likely you will have to make up all delinquent payments to avoid repossession.
If you miss a payment on your car, then the company that loaned you the money to buy the car has the right to take the car without any warning to you. This is called "repossession."
Whether you can get your car back and how much it will cost you to get it back will depend for the most part, on how much you still owe on your car when it is repossessed.
When can your car be repossessed?
As soon as you are late with a payment on your car, your creditor (the business that gave you the loan or credit to buy the car) has the right to get your car.
Even though people at your finance company may say that they will not take your car if you are late with a payment, they can still take your car when you miss a payment. You need to get any guarantees about repossession in writing for them to be legally binding.
How can I avoid repossession?
The best way to avoid repossession is to make sure that you can afford the payments when you buy a car. Then, do not miss a payment.
If it looks like you're going to miss a payment and you call before that payment is late, your creditor may allow you to make arrangements to avoid losing your car. An extension or refinancing will cost some additional money in finance charges.
If you have already missed making a payment, and you think that you will be able to make it up in the next month, you should call your finance company and explain your problem. The bank or finance company may allow you to make a partial payment.
Do not wait to receive a warning letter before you call your creditor to discuss a late or missed payment. The company does not have to warn you before they repossess your car.
What can I do to get my car back after repossession?
If you have paid more than 30% of the total purchase price of the car you can get your car back if you do the following within 21 days of the date of repossession:
1) pay all back payments owed so that you are current on the contract;
2) pay any late charges due; and
3) pay the costs of repossession.
Your creditor must give you written notice of these rights within 3 days after they repossess your car.
If you did not pay 30% of the purchase price of your car before repossession, then the finance company can require you to pay off your entire loan, before they give your car back.
In this case, you must try to speak with a manager or supervisor at the finance company. If you are now able to pay your past due amount, then tell the manager this and promise that you will not be late again. You would still have to pay repossession costs and any late charges.
What happens if I can't pay to get my car back?
If you can't pay the amount required by your finance company to get your car back, then the finance company can sell your car and use those funds to help pay off the rest of your loan.
The finance company will mail you a notice. It should say that they plan to transfer the title of your car to their company, so that they can then sell it. Along with the notice they will send a form, called an affidavit.
If you think that you have a defense to the repossession, you should talk to a lawyer right away. Once you receive the notice, you have just 21 days to fill out and return the affidavit form before your creditor automatically transfers the title.
If you do not have a defense against the repossession then the company will go ahead and sell your car. If the resale price does not cover the amount that you owed on your car, then the company can sue you in court for the money that is still owed on the car. This is called a "deficiency judgement".
Finance companies, banks, car dealers and other businesses can repossess your car if you are late with a payment. You should know that there is not much you can do to stop the repossession from happening. But, if you act quickly, you may be able to get your car back and/or stop the transfer of title depending on how much you still owe on your car.