Car repo also known as car repossession is when a creditor takes back possession of a vehicle that a person has stopped making their scheduled car payments. Usually a lender will wait until a person has missed three scheduled car payments, but a person must be careful to read their contract because in some cases a car repo can take place after just one payment is late. This can be a source of great frustration for a person who has suddenly become unable to make their car payments. If you are in this situation, there are ways to avoid auto repossession
What is the process that is involved in a car repo? A lender may or may not give any warning that the vehicle is going to be repossessed. The lender will hire a "repo man" who will stake out the vehicle and tow it away when the owner least expects it. The repo man's objective is to remove the vehicle without being detected by the owner to avoid a confrontation. A vehicle's delinquent owner could come out of work one day and find their vehicle has disappeared.
Next, the lender will resell or auction the vehicle off. The amount of the sale may offset the cost of hiring the repo man and preparing the car to be sold including replacing the ignition lock and cutting a new set of keys. Then any remaining profit may be deducted from the former vehicle owner's loan amount and the person is now responsible to pay the debt. Many times the person who has had their vehicle repossessed ends up owning close to the purchase price of the vehicle that they no longer have possession of. This makes a very good case for purchasing a vehicle that fits well within a person's budget and doing whatever is possible to keep the payments current.
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