In a majority of cases, most car sales include an auto loan. This means that most people do not pay for their car upfront. Rather they take out a loan and agree to make payments on that loan. In instances where payments aren’t made on time, the lender has the option to repossess the car. But what happens if no one ever comes to get the car? If your car is never repossessed, what do you do? Let's take a look.
If you have been missing payments and are expecting your car to be repossessed, it may come as a surprise when, day after day, no one comes to get your car. So what do you do if no one comes to take your car? Here are a few common questions we hear in this situation:
Absolutely you can continue using your car. If no one comes to repossess your car, you are definitely still able to use the vehicle. We would recommend using it with the same care you would if you were expecting to keep the car. By this, we mean don’t run the car into the ground faster just because you fear you might lose it or it might make it not worth repossessing. Odds are, you will either get to keep the car — at which time you would want the car to be well taken care of — or the car will be repossessed to pay off whatever remains on your loan — at which time you would want the most the car could sell for. Either way, taking good care of the car, while still using it, would be the best course of action.
Yes! In fact, if your car is eligible to be repossessed, but hasn’t been yet, it is even more important to make sure you keep up with insurance and registration. While your car may not be worth repossessing while insured and registered, there are still lenders that will repossess your car if it lapses in insurance to protect themselves from any liability. Because of this, you want to make sure you are keeping your car insured and up to date with all inspections and registrations required.
Technically, the lender owns the title until the loan is fully paid off. So if you stop making payments, but no one comes to repossess the car, you will have the car in your possession, but you will not own it. If your plan is to use the car until it doesn’t work anymore, then this shouldn’t be an issue. However, if you were wanting to resell the car later on to upgrade to a better car, then this will be an issue. To fully own the car, you have to fully pay off the loan. There may be a chance that you could negotiate with your lender for a lower pay off price to get the title. However, without paying off the loan, you will never own the car.
Yes, your credit score may still drop even if no one repossesses your car. On your credit report, it will show that you defaulted on your loan and have multiple missed payments. Even if the car is never repossessed, these missed payments and the defaulted loan will ding your credit on their own.
An auto deficiency is what you owe to a creditor after your repossessed vehicle was sold at an auction and the amount is then applied to your owed amount. In some situations, the lawsuit can be over $5,000 or more as the vehicle may only get a fraction of what you pay for the vehicle, especially if your car is a lemon.
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Here's an example what a Ford Motor Company auto deficiency lawsuit looks like from March, 2023.
You can see that the Plaintiff (Ford Motor Company) is attempting to collect $4989.68 in fees, which may be quite a bit higher than the amount that was due in arrears from the vehicle itself.
Let's next cover why the creditor has not repossessed your car yet.
While it makes sense that a car would be repossessed if you missed your payments, there are some cases where it’s not worth it for the lender to repossess the car. Car values regularly fluctuate, and the value of a car decreases dramatically the second you drive it off the lot. So, if your car is valued below the cost of what it would take to have it towed and resold, then the lender may not immediately come after it.
This sounds nice, but there are some issues if no one comes to get your car. Namely, because car prices fluctuate so widely, there is always a chance that your car is suddenly valuable enough to repossess, even after years of it not being taken away.
Repossession can happen as soon as you first default on your payment. When you sign the loan agreement, the contract should outline the terms of lending, which could tell you how aggressive the lender is in repossession. When a car is repossessed, the lender takes the car back from the borrower. The lender is then able to decide what to do with the car. In most states, there is no law requiring advanced notice given to the borrower before repossession.
There is more than one reason why a car might get repossessed. The most obvious is defaulting on the payment without taking any action to remedy the missed payments. However, there is another reason why a car may be eligible for repossession. Depending on the terms of your contract, your car insurance may be another reason your car is eligible for repossession. If you allow your car insurance to lapse, then there is a chance that the lender may take this as a reason to repossess. When the car you are borrowing on is a liability on the road, the lender is also in danger. This is why some lenders will repossess a car that has no insurance.
Regardless of whether or not your car gets repossessed, you might still owe money to your lender. You have a few options moving forward, especially if you want to make sure you own your car. These are just a few options:
These options can either help you get to a place of financial stability or ensure you own the title to your car. If you’d like to learn more about your options or talk through your situation with someone, give Ascend a call at 833-272-3631! We’d love to help you figure out the best solution for your circumstance.
