If you have a car, odds are, you have a car loan. Cars are big investments that often equate to heavy loan payments that some vehicle owners have trouble making.
Maybe your credit reports showed you could afford your vehicle but your financial situation has changed since you bought the car or maybe you simply overestimated what you could afford.
If you go delinquent on your auto loan that gives the loan company the power to repossess your motor vehicle. When you purchased your car and signed the loan terms, you agreed that you would meet the payments and if you don’t that puts you at risk of losing the ownership of your car.
Fortunately, if you fall behind on your car payments and experience a car repossession, there are steps you can take to get your car back in your possession and on the road. Here’s what you need to know.
How the redemption process works
The repossession process is pretty straightforward. If your car is repossessed, to redeem it (take ownership back), you have to pay off the balance that you owe. Keep in mind, this balance will include any repossession fees and charges, including storage, towing, and attorneys’ fees.
The lender will notify you to give you the option to redeem the car. If you haven’t received the notice within five days of your car being repossessed, you should contact the company. This notice will tell you how much it will cost to redeem the car and the deadline for doing so.
If you don’t pay the deficiency balance by the established deadline, the lender will put your car up for auction and you will be unable to get it back.
The steps you should take when your car is repossessed
Time is of the essence when your car has been repossessed. Once it’s sold at auction, there is no way to get it back. Here are the steps you need to take if your car is repossessed:
Determine if you can afford a redemption: Once you receive the notice from the lender, you need to determine if you can afford to redeem the car. It might be a very large sum of money that is impossible to scrape together in a short timeframe.
Find the funds: If you decide to redeem your car, you need to determine how you’re going to pay the redemption fee. Chances are, if you were unable to pay the monthly payment, you will not be able to pay the full amount plus the fees. One option for acquiring the funds to redeem your car is to apply for a low-interest loan from another financial institution. Another option is to get a loan from a friend or family member.
Notify your lender: Most lenders hold on to repossessed cars for 10 to 15 days before selling them. If you intend to redeem your car, you should notify the company as soon as possible.
Negotiate with your lender: Once you notify the lender of your intent to redeem the car, you might also try to negotiate the amount you have to pay. The lender may stand firm on the price, but there is no harm in trying. Redeem your car: In many cases, a lender will want your redemption payment in a specific form, such as a cashier’s or certified check.
Fill out paperwork: Once you have paid to redeem the car, you’ll probably have to fill out paperwork completing the transfer of the vehicle title. Make sure to keep copies of any paperwork for your records, including a receipt for any costs incurred by redeeming the car. In some locations, you might also need a redemption release from the police, which will probably cost a small fee. Once the creditor is paid, and the appropriate documents have been signed, you are entitled to take possession of your car.