How Does Bank Auto Repossession Work?

Payment Delinquency

When people wish to purchase an automobile, they often have to seek funding from a bank or financial institution. They then make monthly payments until the amount is paid in full. This is called a vehicle loan, and the payment status shows up monthly on all three credit reporting agencies: Experian, TransUnion and Equifax. When financial hardship strikes or the borrower falls behind on payments, they become at risk for repossession of the vehicle. Typically an automobile is repossessed after three months of no payments on the loan. The lender will make phone calls and send out letters that the account is past due and should be payable immediately to avoid a repossession enforcement. If the lender cannot work out a viable payment agreement with the borrower, they will ask them to voluntarily turn in the automobile. Many times this is not possible and a repossession order from a judge is obtained in order for the bank to repossess the vehicle.

Auto Repossession

Once a court order is obtained, the automobile is tracked down and ordered to be picked up. A skip tracer that works at the bank or credit collection agency often makes phone calls and visits to the home or place of work were the vehicle was last seen. Once confirmation is made on the whereabouts of the vehicle, the order is carried out by a local towing agency. Typically, there is no contact with the borrower whatsoever. The vehicle is hoisted onto a trailer or towed to a secure location where it is kept until it goes up for auction or sale.

Sale and Collection

Once the vehicle has been repossessed, it is then immediately cleaned up and stripped of all personal belongings. The car is then taken to be cleaned and detailed out so that it is presentable for a sale. Many lenders vary and how they collect the money owed on the original debt. Often times they will attempt to resell the vehicle themselves in the bank parking lot at the cost of the original debt or loan. For large financial institutions, they may send the automobile to auction so that it can be bid off to the highest bidder. All money earned at the auction or sale will go back to the balance of the loan and the remaining amount becomes due and payable. The difference of the sale in the original debt needs to be paid by the original borrower and is still their responsibility. Collection actions will still be in effect until the entire amount is satisfied with the bank.