If my car is repossessed, do I have to pay off the entire loan balance to get it back?
In most states, you have to pay the entire car loan balance in order to get your car back after repossession. But you might have other options.
Whether you have to pay the entire balance of your car loan to get your car back after repossession depends on where you live and the terms of your car loan agreement.
(To learn more about car repossession, see the articles and Q&As in our Repossession of Cars & Personal Property topic area.)
The Right of Redemption After Car Repossession
In most states, you have to pay off the entire loan in order to get your car back after repossession. This is called the right of redemption. The balance you would need to pay to redeem the vehicle may include extra fees and charges (including repo and storage fees and even attorney fees).
The Right to Reinstate the Loan
You might also have a right to reinstate the car loan. To reinstate the car loan, you get the loan current by making up all of the past due payments, including applicable fees and late charges, in one lump sum. Reinstatement could be an option for you if you cannot pay the car loan off in full. You can reinstate the car loan only if your state's law allows it or if your loan agreement specifically states that you have this right.
To learn more about how to redeem or reinstate your car loan, see Car Repossession: Redemption vs. Reinstatement.
Working Out Something With the Bank
If neither reinstatement or redemption is an option for you, there's no harm in approaching the bank to negotiate a different resolution, such as a partial reinstatement and new payment plan. The bank may even refinance the car loan, if that's viable for you.
Bankruptcy to Get the Car Back
If the creditor is not willing to work with you, then bankruptcy might be an option, depending on your financial circumstances. You might be able to get the car back if you file Chapter 7 bankruptcyor Chapter 13 bankruptcy. (To learn more, see My Car Was Repossessed, Can Chapter 7 Help? and Can I Get My Car Back If It Was Repossessed Right Before Chapter 13?) However, filing for bankruptcy just to get a car back is rarely a good financial decision.