Due to the high cost of automobiles, most drivers take several years to pay off a car, truck or SUV. Financial problems are not uncommon, and a driver could easily face some unforeseen hardship during a car loan. If you find yourself in this kind of situation, your vehicle could be subject to auto repossession at the hands of a repo agent.
What Is Auto Repossession?
Automobile repossession is an act where a lender reclaims a vehicle after a period of nonpayment from a debtor. For example, if you drive off a lot with a new vehicle under a four-year payment plan but fall behind on payments after 18 months, your car could be subject to a repossession. Auto repossession is authorized by lenders and carried out by repo agents, who are sent to reclaim defaulted-on vehicles. Simply put, auto repossession is a consequence of failing to make payments on a vehicle you have yet to pay off in full.
How Does the Process Work?
Once you default on your loan payments, your lender can take action to reclaim the vehicle. So how many car payments can you miss before repo? Technically, a lender could initiate the car repossession process the day after you first default on a loan. Still, most lenders treat cases on a priority basis, going after second- and third-time defaulters first.
When a lender decides to repossess your vehicle, your only option is to negotiate a plan to bring the payments back up to date or pay off the remaining balance in full. Financially, there is really no way out of the matter. If you hide your car, the repo agent will step up efforts to find and seize the vehicle. In many states, it is legal for a repo agent to walk onto your properly to reclaim a vehicle. If you manage to hide the vehicle for any length of time, the repo agent will increase charges to the lending bank, raising the amount that you will ultimately owe at a later date.
As an alternative to repossession, the lender may file a legal request known as a replevin, where the lender asks the court to issue an order requiring the debtor to pay off the remaining loan balance. If the debtor still fails to pay up, they could face further legal penalties. If you allow a situation to escalate to this level, you might be subjected to a lien where the loan balance is garnished from your future wages.
How Does a Repo Man Find a Car?
Some car owners assume they can avoid repossession by hiding a vehicle. This is only a temporary fix to an ongoing problem, and repossession agents have worked through every trick in the book. So how do repo companies find your car if you make it unavailable? There are numerous ways, starting with scans of all the places you are likely to be during a given day, and most agents cast a wide net.
The search begins at a home address, which the lender provides to the repo agent. The easiest repossessions occur in cases where the vehicle is left in plain sight, such as when you park your car on the street or in the driveway in front of your home. The moment you walk inside your house and close the door, the repo agent could sweep in and claim the vehicle.
For the trickier subjects, the repo agent will take matters up a notch and survey the streets around the neighborhood. A common trick among delinquent parties is to park a vehicle a few blocks from home, making it accessible when needed but farther away than where one might expect a repo agent to look. However, repo agents have gotten wise to this trick and routinely scan streets for at least three blocks within the radius of a subject’s address. Many vehicles have been repossessed at this presumed safe distance.
A repo agent will also scan parking lots in or around your place of work — which the agent can find based on the info from the lender — and any supermarkets near your house. If you keep your car parked inside your garage at night yet leave it parked in plain sight as you head into the office, you could find your car gone one day as you prepare to head home for the evening.
A repo agent might also survey your house and wait for you to pull out of your garage. The agent will then follow you to wherever you might be heading, be it the grocery store or out to a restaurant. Once you park the car and head into the store or eatery, the repo agent will then be able to retrieve the vehicle.
These days, repo agents have towing equipment that makes it easier than ever to extract vehicles within a minute or less, even from tight spots. Therefore, you could have your car repossessed at a gas station as you break for the bathroom or go inside the convenience store to pay for gas.
The most aggressive way for a delinquent party to avoid repossession is to keep a car locked inside a garage at all times. Laws vary state-to-state regarding the actions a repo agent can take to get around this obstacle. In some states, a repo agent could get a duplicate key to your garage and enter when you are away or inside your home. If you typically leave your garage door unlocked, your vehicle could be a sitting duck. However, these actions are not legal in all states, as some states interpret garage-entry as “disrupting the peace.”
For hidden cars and even for some vehicles parked at great distances from a subject’s typical haunts, a repo agent might use an electronic detector to track down a vehicle for repossession. These days, many lenders require that all new vehicles be equipped with such devices. As long as a car remains on the lot or under a payment plan, the tracking mechanisms must be active in the immediate location in case of theft or a subject falling delinquent on their payments.
It must be stressed that the law forbids delinquent parties from intentionally avoiding repossession and obscuring a vehicle from repo agents. However, it can be difficult for courts to prove such intent. Subjects are usually found guilty if they suddenly start keeping a vehicle at a relative’s house or some far-off free parking spot. For example, if a repo agent first surveys you driving out of your garage and misses the opportunity that day, but finds you walking to the bus stop on subsequent days, you could be charged with hiding the car if it is repossessed weeks later at your parent’s house.
So how long will a repo man look for a car? A repo agent will pursue a vehicle for however long the lender is willing to pay for the services before taking some alternate form action, such as a replevin. Granted, even if you do manage to keep the vehicle in question off the radar, the lender will notify the DMV, making it impossible for you to renew your driver’s license or update your plate tags until the matter is resolved. There is no way to blow off car loan debt and still drive freely.
How Long Is the Repo Process?
The duration between a defaulted payment and a repossession can take a matter of days or months, depending on your standing with the lender. If you have no prior defaults on your payment plan and have always paid on time for three solid years, the lender is less likely to go the full nine yards in the weeks following your first default. On the other hand, the lender is more inclined to take immediate action if this is your second or third delinquency. Legally, lenders can act whenever they choose, even if it means contacting creditors and repo agents the day after a missed payment.
Once a repossession order goes into effect, the repo agent could come to your house without notice and take the vehicle. The agent will usually be equipped with a duplicate key for the vehicle, but could also enter the car by picking the lock and hot-wiring the engine. In some states, lenders are not required to issue you a notice if they are about to repossess your car. However, lenders are required to inform delinquent subjects of a notice to sell. There are three basic types of notices:
- Acceleration notice: This is a notice issued by the lender to inform you that your loan is in default and that you will now have to pay the remaining balance on the loan to keep the vehicle. If you receive this type of notice, you should contact your lender to negotiate an alternate payment plan immediately. In some states, lenders are required to send a prior notice informing you of intent to issue an acceleration notice.
- Opportunity to cure: This is a notice informing you that your loan must be repaid in full by a specific date if you wish to keep your car. An opportunity to cure may be issued before or after a repossession.
- Post-repossession notice: This would be a notice informing you that your car is about to be sold. Lenders are required by law to issue these notices at least 10 days in advance of a planned sale. A repossessed vehicle may be sold privately or at an auction.
If you receive one of the first two notices, you should act immediately to work out a payment plan with your lender. Once the vehicle is repossessed, you will owe repossession fees and storage costs in addition to the outstanding balance on your loan. Even if the remaining balance on the vehicle is recouped at the resale action, you will still owe the other fees associated with its repossession.
How to Get a Repossessed Car Back?
Once your car has been repossessed, there are several ways to get it back, but each will require that you pay the balance of the loan and any fees related to the vehicle’s repossession.
The first and most commonly chosen option is to reinstate the loan, where you would pay off all outstanding late payments on the loan to bring things up to date. You would also be required to pay the repossession and storage fees for the vehicle. This is generally the least costly route to take once a car has been repossessed.
The second and far costlier option is to redeem the vehicle, where you pay off the outstanding balance on the loan plus all repossession and storage costs, as well as any late-payment fees. If you fell behind on loan payments due to a loss of income or some other financial hardship, redeeming your repossessed vehicle might not be a realistic option since you would basically be asked to pay off the loan’s entire remaining value, plus fees, in a single payment.
A third possible option is to show up at the auction and bid on your vehicle. If you end up winning the vehicle back, you will still be required to pay any outstanding repossession fees. If the auction price of the vehicle falls short of the remaining loan balance, you will be required to pay off that amount too.
The fourth and least recommended option is to file for bankruptcy before the sale takes place. This will place an immediate stay on the sale for a select period, giving you time to produce the funds to reclaim the vehicle. However, bankruptcy itself can cost hundreds of dollars in legal fees and leave a blemish on your credit for up to 10 years. A repossessed vehicle that you could not pay down would probably not be a good enough reason for an option as drastic as bankruptcy.
Can You Become a Repo Agent?
You can become a repo agent if you have the drive to carry out the tasks that the job entails. Given the obstacles that repo agents often face, you will need to have a strong personality to succeed in this line of work. The main objective is to simply fulfill the orders of the lending banks and do what it takes within the law to seize each outstanding vehicle. The job has its perks, but you can also meet resistance when you go onto properties to reclaim vehicles. Therefore, it helps to be formidable in stature.
As a repo agent, you will need to maintain an emotionally unaffected stance while on the job. You will also need the right equipment to seize vehicles in a variety of different places, including narrow hiding spots.
Find Wheel Lift Equipment at Lift and Tow
At Lift and Tow, we sell wheel lifts that make it possible to tow cars and vans of all sizes. If you are interested in starting a repo business, contact Lift and Tow today for more information on our lifting equipment.