What Is Car Repossession? - Dick Says Yes | Used Cars Portland

What Is Car Repossession?

A car repossession (or repo) happens when you can’t pay your car loan or lease. If you miss payments, a lender can take your vehicle back to cover some of the money you still owe on it—sometimes without a warning or court order.  In Oregon and Washington state, for example, advance notice is not required before repossession.

What is the car repossession process?

The laws differ from state to state, but in many cases, your lender can take possession of your car at any time after you default on your loan (a.k.a. stop making the required payments). Typically, cars are not repossessed until after 90 days of missed payments. The person repossessing your car can’t commit any crimes to recover the vehicle, but they can take your car from your driveway or any public or private lot at any time of the day or night. The process goes something like this.

  1. You stop paying what you owe.
  2. The lenders initiate the repossession process by selling your contract to a third party (a.k.a. an “assignee”).
  3. The lender repossesses the car and either keeps it or sells it to cover the debt you owe.
  4. If the sale of the car does not cover your debt, you may receive a deficiency judgment, or a court order to pay the remaining costs (and occasionally the costs associated with repossessing and selling your car).
Repo Company Driver Towing Repossessed Vehicle

How can I avoid car repossession?

The best way to avoid car repossession is to find a car that fits within your budget. Sometimes that is as simple as looking for a used version of your dream vehicle and making sure your total car payment (including interest, principal, and insurance) is less than 10% of your gross income. But if you are struggling to make payments on a car you already own, it is best to talk to your lender.

Many lenders will be willing to lower your payments or delay them to keep you on track. You may also be able to refinance your loan with a different lender (like a bank or credit union) to get a clean slate. Finally, as a last resort, you could voluntarily surrender the car to your lender. You won’t have access to the car anymore and it will still hurt your credit score, but not as much as a repossession (and you may be able to avoid some of the added costs of a lender repossession).

Can I buy a car after a repo?

Having a car repossessed can hugely impact your finances—even after you manage to pay back what you owe—and it could stay on your credit record for at least 7 years after the repossession. Fortunately, if you are rebuilding your credit history and need a car now, you have options at Dick Says Yes. Because no matter what life has thrown your way—whether it’s a repossession, bankruptcy, divorce, bad credit, or even no credit—we can help you find the perfect car to fit your lifestyle (and budget).

We are the largest family-owned auto group in the Portland Vancouver area with thousands of cars to choose from—and we are all about connecting people with the cars they need. Plus, we guarantee every vehicle we sell with our Peace of Mind Pre-owned Promise and a 5-day Exchange Policy; so, you can put worry in the rearview mirror. 

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