Repossession is something no consumer wants to face, but with the recent economic slump, the reality of facing this undesirable process is very real. This article will explore what exactly happens during the repossession process and a few helpful tips the buyer should know about their personal rights.
1. The Loan Provider Collects The Car
Seeing a towing truck pull up and start hooking up the car is the point where the car is actually being repossessed. This act happens after several months of unsuccessful attempts to collect money and the buyer is still unable to pay. Usually after six months the lender will order a contracted repossession agent to pick up the car physically. Consumers should never try to “hide” the car from the repossession agent; sometimes this may result in fines or fees for any damages proved to occur after the scheduled repossession date. Another thing to avoid is fighting or arguing with the repossessing agent; doing so will be fruitless every time and may land a person in more trouble than they can pay their way out of. Also any personal items that the driver values should be removed from the car after the repossession notice is given. If a consumer has installed valuable speakers, a CD player or GPS system, these items should be removed also as they will become the property of the finance company after repossession.
2. Authorities Are Contacted
After repossessing a car, the agent will then call the local police department to notify them that the car has been repossessed. This will hamper any attempts a person may make to report the car as stolen. The authorities are simply notified; those who let the agent collect the car peaceably will not receive a visit from the police.
3. The Vehicle Is Cleaned Out
This is the part where removing personal items beforehand is vital. Owners have the right to claim any tangible items that are not physically attached to the car. For example if a woman left a stash of cash and a pair of ruby earrings in the glove box, she would legally be able to take those back. The only items the finance company is legally able to keep are items such as GPS, security or sound systems which are installed into the car’s interior or body. Unfortunately there are many crooked repossession agents who may steal personal items from cars, so this is another important reason consumers should clean out their car before repossession.
4. The Car Is Shipped Out And Sold
Once the car has been cleaned out, the finance company will send it to another city or state to be put up for public auction. These cars sold at auction are often purchased for a much lower price than they are worth. While buyers may be attached to their car, they may forget the idea of tracking down and bidding on the vehicle. Most vehicles are purposely sent away from the buyer’s area to avoid any trouble with that person.
5. The Final Value
When a car has been sold, the purchase price is applied toward what was owed to the bank. Unfortunately for most car owners, the final value is not enough to cover the amount owed, especially for those who took out longer loans. Buyers with shorter loans and higher payments may be in luck, but almost always those who have a long loan will find the final value falls short. If there is still a balance owed, the consumer will not only be dealing with the loss of their car, but also paying the remaining balance. Failure to pay the balance will result in the lender seeking a judgment which will likely cause wage garnishment. For those who don’t have a job, a bad mark on their credit history may be expected.
Having a car repossessed is not a pleasant process by any means. Buyers should always try to make the payments by cutting back other expenses if possible. Of course this option is impossible for some and the repossession cannot be helped. There are still several ways to rebuild credit after a repossession. For tips on building credit so that future purchases may be possible, consumers should visit FTC: Building a Better Credit Report.
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