Repossessed cars have become a common phenomenon in hard economic times. Car buyers have not been as educated as they have needed to be in order to protect themselves in these kinds of situations. Bank repossessed cars go through an arduous recovery process before they reach repossessed car auctions.
One of the first things you should know if you are facing repossession is that you have rights as a buyer. Since you have not completely paid for the car, it technically still belongs to the bank. You are required to make timely payments, and when you cannot make those payments, you should communicate with your lender immediately and directly.
The truth beneath it all is the bank has no real desire to take the car from you and have to offer it to those who buy repossessed cars. Most of the time, they want to work with you to find a reasonable solution so that they do not create extra chaos for their investment with you. Repossessed cars are a headache for banks and lenders; many can only recoup a fraction of the cost when they have to advertise repossessed cars for sale, especially if they are damaged cars.
If a repossession agent comes to your house, he has been authorized by the lender to take your car. However, he has to stay within certain guidelines in order to be lawful. Most states allow representatives of lenders to come on your property at any hour to take the car without giving you any notice. They are not allowed to make threats against you or use physical force to recover the car. This would constitute a “breach of the peace,” which almost all states prohibit. They also may not come in a closed garage where the car is kept without your permission.
If a lender or its agents violates any of these laws, they may be required to compensate you for damages, and they may lose their rights to reclaim the car.
Once the car has been repossessed, the creditor may choose to keep the car in order to regain what has been lost with your loan. Typically, he finds someone who wants to buy repossessed cars and sells it for a fraction of the original sale price. The creditor must tell you its intent because most states allow you to demand that the car be sold instead of kept. When the car is sold, the lender has to give notice of the sale, at which point you can buy back the car for the posted price plus the costs of repossession.
Repo cars represent a territory most car owners do not wish to enter. However, if you know your rights, it is certainly not the end of the world.