Laws and advice about vehicle repossessions

If you know your vehicle is at risk of being repossessed due to late payments, you may be tempted to try and park it somewhere safe to wait out the repo crew. However, this isn't a good idea and may even be illegal. If you know you’re in trouble, it’s okay. Stuff happens, and you have options. Start by contacting the financier (usually the dealer or a bank) and being upfront about your situation. Taking your car and selling it is a lot of work for them, and they’ll meet you in the middle if you’re open and honest about what you can afford. We'll walk you through all of your options, below.

Things You Should Know

  • Avoid trying to hide your car if it's going to be repossessed. It’s best to try and work with the financier to work out a payment plan.
  • Selling the car is unlikely to be a viable solution since there’s likely a lien on the title and you need the financier’s permission to sell it.
  • If you can’t afford the payment but want to keep a car, consider taking out a personal loan to cover the difference.
Section 1 of 4:

Can you park somewhere secret to avoid a repo?

  1. In some states, it’s actually illegal to try and hide from a repossession crew if you’ve defaulted on a car note. But even if it isn’t, the repo crew is allowed to go on your property to get the vehicle. Hiding is never going to be the best move if you’re behind on your car loan, especially since lenders will often work with you if you’re honest and upfront about your situation.[1]
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Section 2 of 4:

How to Avoid a Repossession

  1. The financier doesn’t actually want your car—they just want the cash. So, if you call them and try to work something out, they’re very likely to hold off on the repossession. Call them, ask to speak to a manager, and explain your situation. Try to negotiate a payment plan. They may even give you a break on the interest or due dates![2]
    • It’s a lot of work for the financier to go find the car, pay a tow truck to get it back, and then sell it on the open market. They will make things easy for you if you can meet them halfway.
  2. If you have the funds to cover the late payments, just pay the financier—even if it puts a dent in your monthly budget somewhere else. It’s going to be much more expensive to get your car back or buy a new one than it’s going to be to pony up now. Dip into your savings, ask for an advance on your next paycheck, or ask a relative for a helping hand.[3]
    • When you pay, contact your financier to let them know your payment is on the way. That way, they can contact any active repo crews out there to let them know they can call the hunt off.
  3. If you can’t scrape the funds together but you’re going to be able to make the balance up in the near future, take out a personal loan. Go to a bank, credit union, or private lender and take out a loan for the amount you owe. Use that to pay the financier, then pay the lender when you get paid.[4]
    • Avoid doing this unless you absolutely have to, and do not take out more than you need. The interest rates on a personal unsecured loan are going to be much higher than the rates on your car note. It’s better to owe on a car note than on a personal loan.
  4. It’s actually not the end of the world if you let them repossess your car. It won’t hurt your credit in any unique way (the late payments already do that), and the financier will sell the car for the balance of your loan. If they can’t cover the total sum of the loan, you’ll at least only owe a small sum compared to the total loan amount.[5]
    • If possible, call the lender to let them know you’re giving the vehicle up and voluntarily drive it to them. This will usually save you some towing fees.
    • For example, if you have an outstanding balance of $15,000 and the financier repossesses it, they’ll try to sell it for $15,000. If they do, you owe nothing and this whole thing is over. If they can only get $13,000, you’ll only be on the hook for $2,000 and your new payments will be much smaller.
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Section 3 of 4:

Can you sell a car under repossession?

  1. In some states, it’s illegal to sell a car with a lien on the title, which is usually what happens when you default on the loan. You could potentially sell the vehicle to cover the loan, but there’s a possibility the car is repoed in the middle of a private sale, so you probably have to go to a dealer. You also can’t sell a car with a lien on it without the financier’s permission, which they’re unlikely to give you if they just want their car back.[6]
    • Most dealerships are going to be unlikely to pay full price for your car because they know it’s under repossession and you don’t have much leverage.
    • If it’s legal where you live and you can sell the car for more than the balance of your loan, do it! It’s just going to be tough to pull off a lot of the time.
Section 4 of 4:

Best Practices While under Repossession

  1. Most modern vehicles have GPS built into the vehicle, and a lot of dealerships will put a tracker on vehicles that have outstanding loans on them. In other words, the odds are high that they know where your car is[7]
    • Warning: Do not tamper with the vehicle’s GPS and don’t remove any trackers if you find them. There are likely to be a few clauses in your loan contract about penalties for removing them.
  2. Taking the license plate off won’t do anything since the repo man is looking for the VIN. You may be tempted to cover the VIN up, but that’s actually illegal. The repo crew will just call the cops who will show up and write you a ticket and then the car will get repoed anyway. Save yourself the trouble and don’t mess with the VIN or plates.[8]
  3. If you know your car could potentially be repoed, don’t leave your belongings inside. Remove anything you want to keep from the trunk, look under the seats to remove stuff you might have missed, and give your car a thorough cleaning. That way, if the worst does happen, you won’t have to worry about going to get your stuff back.
    • Bring your documents with you every time you park, too. You need to have your insurance and registration in your car when you drive. However, you may need to prove that your car was insured and registered even after it’s towed.
  4. If they’ve located your car and legally accessed it, just let it go. Nothing good is going to happen if you argue with the repo crew, shout, or try to sit in your car to keep it from being towed. They’re legally allowed to take the car, and losing your temper is only going to land you in legal trouble.[9]
    • The one exemption is Wisconsin. If you catch the repo crew in the process of towing your car and they don’t have a court order with them, you can simply tell them to stop and they have to unhook your car.[10]
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Warnings

  • Most states have a law on the books that makes self-help repossession legal. This means that as soon as you default on the car loan, the financier can repossess your car without warning or a court order.[11]
  • Filing for bankruptcy can help stop repossession temporarily, but avoid filing for bankruptcy unless that’s actually a viable and productive option for you. Talk to a bankruptcy lawyer if you think this might be a potential option.[12]
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About This Article

Bryan Hamby
Co-authored by:
Professional Auto Broker
This article was co-authored by Bryan Hamby and by wikiHow staff writer, Eric McClure. Bryan Hamby is the owner of Auto Broker Club, a trusted auto brokerage in Los Angeles, California. He founded Auto Broker Club in 2014 out of a passion for cars and a unique talent for customizing the car dealership process to be on the buyer’s side. With 1,400+ deals closed, and a 90% customer retention rate, Bryan’s focus is to simplify the car buying experience through transparency, fair pricing, and world class customer service. This article has been viewed 2,249 times.
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Co-authors: 4
Updated: October 16, 2023
Views: 2,249
Categories: Home and Garden
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