Car repossession is an action that is taken by the creditors or lenders to take possession of the debtors’ car with or without a court statement. It usually happens when the debtor does not meet the signed contract conditions. In this article, we will see about ‘What Car Repossessed?’.
What Car Repossessed?
When someone buys a car on signing an agreement of paying the car installments each month. Car repossession occurs majorly because the lender has failed to give loan payment back to the company from which the load is taken. When a delay in payment is from the debtor side the creditor has the right to take back the car without sending a legal warning according to the agreement that is signed by both sides.
What are repossessed cars?
A repossessed car is a vehicle that is taken back from the owner who has bought the car on lease from a bank or creditors.
Car Repossession:
The lenders have the authority to take the car back from the debtor. It could happen due to multiple reasons but most of the time it happens when loan payments are not being paid for a certain period. The creditors can start the process of repossession on the first loan payment being missed by the debtor. The delay in loan payments leads to cars being repossessed by the loan lenders.
Types of Car Repossession:
Car repossession is categorized into two types.
- Voluntary Repossession
- Involuntary repossession
Voluntary repossessions of cars is a very rare case when the debtor returns the car willingly to the creditors keeping their financial condition in mind.
In most cases, cars that are repossessed are taken back without permission or notice by the loan companies.
Conditions on which car is repossessed:
All the conditions are mentioned in the agreement on which the lenders can repossess the car if the debtor fails to fulfill those conditions. It is the debtor’s responsibility to mention the conditions and defaults in the agreement before signing it to avoid any inconvenience in the future. The repossessions term and conditions can also be clearly stated while taking a car on lease from the lender.
- The lenders can take the car possession after the loan installment is not paid for at least 30 days from the last installment or 90 days at most.
- The lenders are free to take the car away without warning the owner or sending a legal notice as per the agreement.
- When a car is repossessed all the previously paid installments go in vain if the car owner is delaying the payments for a long time.
- Bankruptcy cases usually end with getting possession of leased items such as cars, houses, etc.
What happens to repossessed cars?
The repossessed cars are taken back forcefully or peacefully and are usually put on sale by the lenders in an auction or showroom. It is a legal duty of the lenders to inform the previous owner about the auction date and time, just in case they want to get it back.
Ways to Avoid Car Repossession:
Every state has different law for the repossession of a car. However, the lenders are under no obligation to notify before a car repossession. Although the bank has the right to repossess the car by hook or crook. Here are a few ways that can avoid the inconvenience of getting the car repossessed:
- Pay installments on time and make sure that the car loan is current.
- Extend the loan payment via an agreement to avoid repossession if you are not making installments on time.
- Before lending a car ask the company about the complete guide on repossession.
- Avoid late loan payments.
- Companies sometimes charge unlawfully that mark your loan statement as default which results in car repossession.
- Talk to the lender to reinitiate the loan for the car including the previous unpaid installments.
Conclusion:
Car repossession is a step that is taken by the legal authorities to take back the leased vehicle even from private property. Cars are repossessed when loan payments go unpaid for a noticeable period, the lenders are under no obligation to send a warning notice before coming to get a hold of the car. Only those cars are repossessed by the creditors when the debtor is unable to pay the debt based on their current or future financial status. Therefore, it is important to keep a track of your bank balance and pay installments on time to avoid repossession.
FAQs:
- Can repossessed cars be bought?
Repossessed cars are put on sale by the banks after getting a hold of the vehicle to recover the loan amount.
- After how many unpaid installments cars are repossessed?
Lenders usually put the car under repossession process when the debtor misses an installment for the first time. The lender commonly waits for about 60 to 90 days for the loan payment to be cleared by the debtor. If the loan is not paid they have the right to repossess the car without sending any legal notice.
- Can the bank keep personal belongings from the repossessed car?
It is illegal for the bank or the lenders to keep the personal belongings of the owner of the repossessed car. The owner can ask for the belongings if not returned by the lender.
- Who will pay for the damage to the repossessed car?
If the damage to the car is done during the transferring process from the owner’s house to the lender’s place then the repossessing company will be charged for the damage.
