ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel


Updated on July 16, 2018
Chuck profile image

A part-time college economics & finance instructor who began his career in banking, Chuck frequently writes on money & economics online.

It is best to Work with the Lender to Try to Avoid Repossession

Repossession generally refers to a lender taking possession of a vehicle from a borrower who is in default on a vehicle loan. Because vehicles, like houses and other types of real estate, have value and can be sold, lenders are more willing to not only make loans on such property but are often willing to charge a slightly lower rate of interest on these loans compared to loans (often referred to as unsecured or signature loans) on which they simply have the borrower's promise of repayment.

When a person obtains a loan to purchase a car or other vehicle, he or she pledges the vehicle as collateral for the loan. In effect the borrower is telling the lender that they can take the vehicle and get the loan amount back by selling it if the borrower fails to repay the loan as promised. Unlike real estate, which cannot be moved, cars and other vehicles can be moved to a new location and hidden. Because of this lenders generally charge more interest than they would for real estate and try to move faster to take possession of the vehicle when the borrower fails to make the payments as promised.

It is Best to Try to Avoid Repossession

In the United States, lending is generally regulated by the states and not the Federal government. Because each of the fifty states have their own laws in this area, it is difficult to explain the process in detail. Suffice to say that, in all fifty states the lender has the right to eventually take possession of the vehicle and sell it when the borrower fails to repay the loan.

How and when a lender can take possession of a vehicle is what varies from state to state. In some states there are prescribed waiting periods between the time the borrower fist stops making payments and when the lender can start the process of taking possession of the car. In the case of the actual taking of the car this can require contacting the borrower and picking the car up from them, tracking the car down and towing it from a public place, like a parking lot, or going to the borrowers residence and towing it off the property. Some states allow taking the vehicle for a person's property and, of those that do allow this, the laws vary as to whether the vehicle can only be towed from an open area, such as a driveway, or whether the person doing the work of repossessing can break into a closed or locked garage or locked gate.

While sneaking into a person's garage in the middle of the night and surreptitiously removing the vehicle of a person who has failed to make their loan payments makes for a good story or movie, this, even when it is legal, is not that common. It is much cheaper to go and ask for the keys to the vehicle, after sending a formal notice of default and intent to repossess, than to have to go to the trouble and expense of hiring a professional to break into a property and take the vehicle. Most people will usually comply with a request to surrender a vehicle on which they are no longer able to make the payments.

Once a lender has possession of the vehicle they will proceed to sell it, usually at auction. Following the sale, the lender is entitled to keep the balance of the loan due, unpaid interest due and any other fees due them for the vehicle. Any funds in excess of these amounts are returned to the borrower as their remaining equity in the vehicle. If, which is often the case, the proceeds from the sale are not sufficient to compensate the lender for all funds due, they can still, in most states, take legal action against the borrower and get a judgment against the borrower for the balance due. This, of course, adversely affects the borrower's credit, and it also makes it difficult to buy another vehicle or other property as the lender can go after that property to get the money the court awarded them with their judgment.

If you have a vehicle loan and find yourself unable to make the payments the best course of action is to contact the lender immediately and try to work out some arrangement. Depending upon your circumstances, you may be able to work out some arrangement to temporarily reduce the payments or have late charges waived and possibly interest reduced while you solve your problem (such as temporary unemployment due to a strike, temporary layoff, temporary illness or accident, etc.). If it is an expensive car you may be able to sell it and get enough to repay the loan or you may be able to give the car to someone else in exchange for them taking over the payments (be careful here as, unless they refinance it and get a loan in their name, you will still be responsible for the repayment of the loan if they stop paying).

Generally, most lenders will try to work with you if you are sincere and can convince them that their chances of getting their money are better if they work with you (for instance, if your financial problems are temporary and you need the vehicle to get to work it does the lender no good to take the car, especially if they cannot sell it for what is due them, and thereby ensure that you will not be able to work and get the money to repay them). Repossessing a car is an expensive process and the lender's objective is to get their money back and not lose more getting revenge on the borrower.

© 2006 Chuck Nugent


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)