Overview
If you fall behind on payments and your loan is secured by your vehicle, your vehicle could be at risk of repossession. However, repossession is typically a last resort, and there are steps you can take to avoid losing your car if you're struggling with payments.
This guide explains how repossession works, what leads to it, and how you can protect your vehicle and credit.
What Leads to Vehicle Repossession?
When you take out an auto secured loan, your vehicle serves as collateral for the loan. If you fail to make payments, your lender has the legal right to repossess your vehicle in accordance with the terms of your promissory note or retail installment contract, as well as applicable laws.
✔ Missed Payments – If you repeatedly miss payments or fail to bring your loan current, your lender may consider your loan to be in default.
✔ Loan Default – Your loan is considered in default if a payment is one day past due; however, the risk of repossession increases the longer your payment remains unpaid. Missing multiple payments may lead to late fees, negative credit reporting, and ultimately, repossession of your vehicle in accordance with your loan agreement and applicable laws.
✔ Failure to Communicate – If you're facing financial hardship but don’t contact your lender, you may miss opportunities to set up payment assistance options.
💡 Important: Repossession can damage your credit, make it harder to qualify for loans in the future, and may still leave you with a balance to repay after the vehicle is sold.
What Happens If My Car Is Repossessed?
- Repossession Costs – You may be required to pay the repossession fees, which can be added to your balance.
- Vehicle Sale – Your lender may sell the vehicle to recover the remaining loan balance.
- Deficiency Balance – If the sale of the vehicle does not cover the total amount you owe, you may be responsible for paying the remaining balance (deficiency balance).
- Credit Impact – A repossession will appear on your credit report, making it harder to get approved for loans in the future.
How to Avoid Repossession
If you're struggling to make payments, taking action early is key to protecting your vehicle and financial health.
✔ Communicate with Your Lender Early – If you’re at risk of missing a payment, contact your lender immediately to discuss possible options.
✔ Explore Payment Assistance Options – Some lenders may offer temporary payment relief, payment plans, or due date adjustments.
✔ Set Up AutoPay – Enrolling in AutoPay ensures payments are made on time and reduces the risk of late fees or missed payments.
✔ Make Partial Payments If Possible – If you can’t make the full payment, ask if partial payments can help prevent repossession.
💡 Tip: Proactively managing your loan and reaching out for help before you miss a payment can prevent repossession and protect your credit.
Next Steps
If you're concerned about making payments on your auto secured loan, log into your My Account dashboard to review your payment options or contact your lender for assistance.