If you lose your car, van, truck, or other 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.
If you take out a loan to buy a car or other vehicle, you’ll most likely sign a contract that says the car acts as collateral for the loan. If you don’t make the payments, the lender may repossess the car. After repossessing the car, the lender will sell it to pay off the amount you owe, or at least part of what you owe. (To learn more, see Car Repossession Laws: An Overview.)
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. (Get further details about how repossession works in How Motor Vehicles Are Repossessed.)
Depending on the terms of your loan contract and state law, you likely have two straightforward options for getting the car back after a repossession.
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.
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 the loan contract. (Learn more about the difference between reinstating a car loan and redeeming the vehicle.)
After a repossession, the lender will probably send you a letter telling you about your right to redeem and/or reinstate. The letter will usually contain details about what you should do if you’d like to exercise either of these options. (To learn more about redemption and reinstatement letters, see Required Notices in Car Repossessions.)
What to do if you don’t receive a notice about your rights. If you don’t receive a letter from the lender soon after it repossesses your vehicle, be proactive and 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 time period for these options. You’ll need to act quickly. (Learn more in Getting Your Car Back After Repossession.)
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. However, even if you buy back the car, you will 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." To get more information about deficiency balances, see Deficiency Balances After Repossession.)
Below are some examples of situations where the repossession might be unlawful.
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 help you get your car back by raising any illegalities either directly to the lender or by filing a lawsuit in court. (To read more about when you might want to hire an attorney if a lender repossesses your vehicle, see Do I Need a Lawyer If My Car Has Been Repossessed?)