Can I Get My Repossessed Car Back?

If you take out a loan to buy a car or other vehicle, you'll most likely sign a contract that says the vehicle acts as collateral for the loan. If you don't make the payments, the lender may repossess the car. After repossessing the vehicle, the lender will sell it to pay off the amount you owe, or at least part of what you owe.

Repossession laws vary from state to state. Typically, the lender may repossess the vehicle using a process known as "self-help" repossession. With this type of repossession, the lender doesn't have to file a lawsuit in court before taking your car. Instead, the lender simply hires a repossession company to go get the vehicle. Still, even after losing your car, van, truck, or another vehicle to a repossession, you have options for getting it back. You may:

• pay off the full amount of the loan (called "redeeming" the vehicle)
• catch up on past-due amounts (called "reinstating" the loan), or
• buy the car back when the lender sells it at auction.

Also, you might be able to get the car back if the lender wrongfully repossessed it, though you'll probably need a lawyer to help you through the process.

How to Get Your Car Back By Redeeming It

You may pay off the loan, which is called "redeeming" the vehicle. To redeem the vehicle, you'll have to pay the entire loan balance, plus any late fees, collection costs, and repossession costs, like towing charges, storage fees, repair expenses, and others.

After you redeem, the lender will return the car to you, and you'll own it outright.

How to Get Your Car Back By Reinstating the Loan

You may catch up on past-due amounts, which is called "reinstating" the loan. To reinstate the loan, you'll have to pay the past-due amounts, including late charges or other fees, plus the costs of repossession. Upon reinstatement, the lender returns the car to you, and you have to resume making payments under the terms of the loan contract.

How to Redeem or Reinstate Your Repossessed Car

After repossession, the lender will probably send you a letter telling you about your right to redeem or reinstate. The letter will usually contain details about what you should do if you'd like to exercise either of these options.

What to Do If You Don't Get a Notice About Your Rights

If you don't receive a letter from the lender soon after it repossesses your vehicle, be proactive. Contact the lender right away to find out what you need to do to redeem or reinstate. Be sure to ask for a statement that includes a breakdown of what you must pay and how you should make payment.

You Probably Don't Need to Hire an Attorney

It's easy enough to arrange a redemption or reinstatement without help from an attorney, though be aware that you get a limited amount of time for these options. You'll need to act quickly.

Another Option: Buy the Car Back at the Auction

If your lender repossesses your car and then sells it at an auction, you may bid on the vehicle to try to buy it back. But even if you buy back the car, you'll still remain liable for any resulting deficiency balance. (If the proceeds from the sale don't cover the total you owe to the lender, the difference is called a "deficiency" or a "deficiency balance.")

Illegal Repossessions

Below are some examples of situations where the repossession might be unlawful.

• The repossession company breached the peace when taking your car. Repossession agents must follow certain guidelines when repossessing your vehicle. They can't threaten you, use violence, break into a locked garage, or damage your personal property, among other things.

• The repossession company took a car that wasn't actually collateral for the loan. Mistakes sometimes happen. Repossession companies occasionally take the wrong car.

• You were late in making your payment, but you weren't in default. Suppose you were two weeks late in making your monthly car payment, and the lender repossessed your car. However, your contract says that you get a two-week grace period, and you're not in default until you're more than 30 days late on a payment. In this situation, you weren't in default, so the lender shouldn't have repossessed the car.

• You weren't late on payments. It's not unheard of for a lender to repossess a vehicle even when the borrower is current in payments.

• The repossession was due to a lack of insurance, but you had coverage in place. A lender can usually repossess your vehicle if you don't have adequate auto insurance in place. But if your insurance coverage didn't lapse—maybe you just switched to a different insurance company—then your lender doesn't have the right to repossess the vehicle.

Talk to an Attorney

Again, you probably don't need to hire an attorney if you want to redeem the vehicle, reinstate the loan, or buy the car back at the auction. But if you think your vehicle was unlawfully repossessed and the lender won't help you, you should consider hiring or at least consulting with a local attorney. An attorney can tell you if the lender's actions were against the law, as well as help you get your car back by raising any illegalities either directly to the lender or by filing a lawsuit in court.