Car repossession can be a frightening experience. If you’ve fallen behind on your car payments, you might be worried about losing your vehicle. This article will explain what car repossession is, how it happens, and what your rights are. We’ll also address a common question: Does AAA repo cars? While AAA is known for roadside assistance and auto insurance, they are not involved in car repossession. Repossession is a process carried out by lenders when borrowers default on their auto loans. Let’s delve into the details of car repossession and what you need to know to protect yourself.
What Is Car Repossession?
Repossession occurs when your lender takes back your car because you have failed to keep up with your car loan payments. When you finance a car, you don’t fully own it until the loan is paid off. Until then, the lender is the legal owner and has the right to reclaim the vehicle if you breach the loan agreement, typically by missing payments. This is often referred to as self-help repossession, because in most states, lenders are not required to obtain a court order to repossess your car. Even missing a single payment can trigger the repossession process. Once you are in default, the lender can hire a repo company to seize your vehicle, often without prior warning. Repo agents are permitted to take your car from public locations like streets or parking lots. However, they are legally restricted from repossessing your car from private property that is locked or gated without permission.
After repossession, the lender will usually sell the car, often at auction, to recoup their losses. If the sale price doesn’t cover the outstanding loan balance, including fees and the costs of repossession and sale, you may be held responsible for the remaining amount. This is known as a deficiency balance. Besides the financial burden of a deficiency balance, repossession negatively impacts your credit score and can lead to additional expenses like towing and storage fees. Understanding the repossession process is crucial for car owners, enabling you to take proactive steps to avoid it or to navigate the situation effectively if you are at risk.
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How Do Repo Agents Track Down Cars?
When you default on your car loan, your lender may employ repo agents, sometimes known as “repo men,” to repossess your vehicle. These agents are adept at locating vehicles and use various methods to track them down. They gather information from multiple sources to find your car. Initially, when you apply for a car loan, you provide personal details to the lender, such as your home and work addresses, and phone numbers. Repo agents utilize this information as a starting point, conducting physical surveillance at these locations. They may stake out your home, workplace, and surrounding areas, including nearby streets and parking lots, to spot your vehicle.
In addition to physical surveillance, repo agents leverage publicly available information to locate cars. This includes online activity and social media. Information you or your acquaintances post online can be used to track your car’s location. For example, if you post a photo of your car at a particular location or if friends tag you in social media posts at certain venues, repo agents might monitor these platforms to determine where your car is parked.
The Role of Technology in Vehicle Tracking
Technology has significantly transformed the methods repo agents use to find cars. Many modern vehicles are equipped with GPS tracking systems, often installed by dealerships. If your car has such a system, repo agents can precisely pinpoint its location at any given moment. This makes the repossession process considerably faster and more efficient.
License plate scanners are another powerful tool in the repo agent’s arsenal. These devices can rapidly scan license plates of vehicles in various locations, such as neighborhoods, parking lots, and public roads. When a scanner identifies a license plate associated with a vehicle flagged for repossession, agents can quickly move in to seize the car if it’s in a public and accessible area.
Where Repo Agents Are Allowed to Seize Your Vehicle
Repo agents are legally authorized to repossess your vehicle from any public space. This includes parking lots of shopping centers, grocery stores, restaurants, parks, and public streets. However, the law generally prohibits them from entering locked or gated private property to repossess your car without explicit permission. They cannot break into a locked garage or cut through a gate to access your vehicle.
It’s essential to understand that if you are behind on your car payments, repossession can occur without prior notice as long as your car is parked in a public location. To prevent the disruption and stress of repossession, it’s crucial to proactively address your loan situation as soon as possible. Contacting your lender to discuss options, creating a payment plan, and understanding your consumer rights are vital steps in managing your car loan and avoiding repossession.
Limitations on Repo Agents’ Actions
While repo agents have various methods to locate and repossess your vehicle, their actions are not without limits. Both federal and state laws place restrictions on what repo agents can legally do when tracking and repossessing a car.
For instance, it’s typically illegal for repo agents to repossess a vehicle from a locked garage or gated private property without obtaining permission. Furthermore, repo companies are not legally entitled to keep any personal property that is inside the car when it’s repossessed. They are obligated to provide the car owner with a reasonable opportunity to retrieve their personal belongings. This rule pertains to portable items like car seats, books, and other personal effects. However, it generally does not extend to items that have become a permanent part of the vehicle, such as upgraded stereo systems or other vehicle enhancements.
If you believe that a repo agent has violated these rules or that your car was illegally repossessed, it is important to take action. You should report the incident to your local law enforcement and your state attorney general’s office. Additionally, consulting with a private attorney can provide you with legal guidance and help you understand your rights and options.
What Happens After Repossession?
Even after your car has been repossessed, you still have certain rights. Following the repossession, you are entitled to receive specific notices from the lender. These notices must inform you of where your car is being stored and the total amount you still owe on the loan. The lender is also required to notify you if they intend to sell your car, whether through a public or private auction.
In many states, if the lender chooses to sell your car at a public auction, they must provide you with advance notice of the date, time, and location of the auction. This gives you the opportunity to attend and bid on your car. In most public auctions, you have the chance to reclaim your car if you place the highest bid. If the car is to be sold in a private auction, the lender is usually obligated to inform you of the date of the sale.
Regardless of whether the sale is public or private, you remain responsible for any outstanding debt that the car sale does not cover. This includes the remaining principal balance on the car loan, accrued interest, towing and storage fees, auction costs, and other related expenses. If the proceeds from the car sale are insufficient to cover these costs, the lender can pursue legal action to recover the deficiency balance. They may seek a court judgment against you for the outstanding amount.
In many jurisdictions, you have the option to redeem the car, which means you can get your car back by paying off the full outstanding loan balance, including all repossession and sale-related costs. This process is known as redemption, and the specific rules and timeframes for redemption vary by state. It’s crucial to familiarize yourself with your state’s redemption laws. Before deciding to redeem, carefully assess your financial situation. If the underlying financial difficulties that led to repossession persist, reinstating the loan might lead to further financial strain.
Steps to Take When Facing Potential Car Repossession
If you are facing financial difficulties and struggling to keep up with your car payments, the most important first step is to contact your lender immediately. Open communication is key. Your lender might be willing to work with you to find a solution. Options could include creating a revised payment plan, temporarily deferring payments, or refinancing your loan to make the monthly payments more manageable and avoid repossession. Another option to consider is selling your car yourself to pay off the loan and avoid the added costs and negative credit impact of repossession.
Bankruptcy is another option to consider if you are deeply concerned about car repossession and are facing overwhelming debt. Filing for bankruptcy can immediately halt repossession efforts. While bankruptcy doesn’t erase the debt on your car, it can provide you with time and legal protections to reorganize your finances and potentially keep your vehicle. Bankruptcy can also alleviate pressure from other debts, allowing you to prioritize your car payments.
Whatever course of action you choose, avoid ignoring the problem or simply missing payments without communicating with your lender. Hiding your car from repo agents is also not advisable and will likely increase your financial burden. As long as your loan remains unpaid, interest continues to accrue, and additional fees may be added, increasing the total debt you owe. Proactive communication and seeking solutions are always better than avoidance.
How Repossession Affects Your Credit Score
Car repossession has a significant and long-lasting negative impact on your credit score. Repossession is a serious derogatory mark on your credit history, signaling to credit bureaus and lenders that you failed to meet your financial obligations. Credit scores are designed to predict your creditworthiness, and a repossession is viewed as a major risk factor by lenders, landlords, and even potential employers.
The negative impact begins even before the repossession itself. The late or missed payments leading up to repossession are reported to credit bureaus. Payment history is the most significant factor in your credit score, accounting for about 35% of your score. Each missed payment will lower your score. When your car is ultimately repossessed, this event is also reported to credit bureaus as a repossession, further damaging your credit.
A repossession remains on your credit report for seven years from the date of the first missed payment that led to the repossession. During this period, it can significantly hinder your ability to obtain new credit or secure favorable interest rates on loans and credit cards. Landlords and utility companies may also be hesitant to approve applications from individuals with a repossession on their credit report.
Furthermore, the deficiency balance resulting from repossession can also harm your credit. If you fail to pay the deficiency balance, the lender may send the debt to collection agencies or pursue legal action against you. Both collection accounts and legal judgments will further damage your credit score.
Rebuilding Credit After Repossession
While repossession is a serious financial setback, it is possible to rebuild your credit over time. The key is to focus on responsible credit behavior going forward. Make all future payments on time, whether for credit cards, loans, or utility bills. Consider seeking guidance from a credit counselor who can provide personalized advice on credit repair. Using secured credit cards responsibly can also be a useful strategy to rebuild credit. Regularly monitor your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) to ensure accuracy. If you find any errors, such as incorrectly reported late payments, dispute them with the credit bureau immediately.
Recovering from a repossession takes time and consistent effort. However, by adopting sound financial habits and actively working to rebuild your credit, you can regain financial stability and improve your creditworthiness over time.
In Summary
Car repossession is a challenging situation to face, and even the anticipation of it can cause significant stress. It is always best to proactively communicate with your lender if you anticipate difficulty making payments or if you have already fallen behind. Avoid hiding your car from repo agents, as this will not resolve the underlying issue and may worsen your financial situation. If you are at risk of car repossession, it’s advisable to seek professional legal advice to fully understand your rights and explore all available options. Remember, AAA does not repo cars, and if you are facing repossession, understanding the process and acting proactively are your best defenses.
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LinkedInThomas “TJ” Pearson is a Staff Attorney at the Metropolitan St. Louis Equal Housing and Opportunity Council (EHOC). He represents tenants in eviction cases and related landlord-tenant disputes. TJ is from Belleville, Illinois and currently lives in St. Louis, Missouri. He receive… read more about Attorney Thomas J. Pearson
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LinkedInJonathan Petts has over 10 years of experience in bankruptcy and is co-founder and CEO of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John’s University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in bankrupt… read more about Jonathan Petts
