How not to Become a Victim of Repossession
Nobody wants to be the victim of repossession as a result of defaulting on their loans. It's often repeated advice - and it's often repeated because it is vital and true - that you should always read any loan documents very carefully. Make sure you know how the loan company defines defaulting on the loan so you can act before you reach a default.
Once your car has been repossessed, it's pretty hard to get ownership back; avoiding repossession is very much the thing to do if you can manage it at all. One key to this is to always be honest with your loan company; if you think you might have problems meeting a payment, or a payment will be late, then tell the company, they may well be willing to find a compromise with you.
It's in the lender's interest too, to avoid going through repossession; it's an administrative cost for them for one thing. The lender sells repossessed vehicles to try and make back the value of the loan: they are unlikely to realize this value as the value of a vehicle starts to go down as soon as it leaves the dealership.
Once you are in default on your loan your vehicle can be repossessed any time. In order to avoid conflict and to have a good chance of finding the vehicle at your home, early morning and late night are often the most popular times for lenders to attempt a repossession. All they've got to do is hitch the vehicle up to a tow truck: legally they don't even have to tell you.
If you think you are likely to go into default on your loan then it's still worthwhile talking to the lender. The benefits at this stage are minor, but if you return the vehicle voluntarily then you will avoid the lender charging you the costs of repossession.
The lender can then either keep or resell the vehicle, but they do have to tell you what they plan to do. There is also a duty on their part to give you the chance to buy the vehicle yourself. If, as is often the case, the resale of the vehicle doesn't realize the full value of the loan, you are still responsible for making up the difference.
Repossession is traumatic and embarassing and will also damage your credit record, making it harder for you to get access to loans in future. Avoid it at almost any cost.
The keys to avoiding repossession are relatively simple, but all too easily ignored: make sure you can afford any loan you take out and always communicate with your lender if you think you are going to have problems.
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