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What To Do When The Bank Repossesses Your Car?

Here’s a brain buster:

Just because you bought something, doesn’t necessarily mean you own it.

A common example is when you buy something on a secured loan. As long as the loan remains unpaid, you never truly “own” the item. It might be a house, a boat, or in our case — a car.

Make your regular repayments and everything is fine. But what if you stop making your repayments? What if you simply can’t?

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Knowing When Someone Can Repossess Your Car

If your car is part of a secured loan and you default on your payments, the person or entity you owe money to is legally permitted to repossess the car.

Keep in mind the car itself needs to be the security used on the loan. If you use an unsecured personal loan to buy a car, the car is yours. A bank might repossess the vehicle as part of asset seizures if you fail to pay, but you can sell the car on without it being financially encumbered.

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Repossession Process

First, you’ll get a notice telling you the lender is going to repossess the vehicle. You must receive 30 days warning before taking the car.

You can use this period to stop the repossession in several ways:

  • Pay the outstanding monies.
  • Renegotiate a payment plan with the lender. This might be a modified repayment schedule or a delay on repossession itself, or even request a hardship situation if you’re sick or unemployed.
  • Provide evidence of the ability to pay the monies owed in the imminent future.
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Next, the car will be taken, if you haven’t stopped the process. Within 14 days you’ll receive a notice with the following information:

  • The estimated value of the vehicle
  • The cost of repossession
  • Any ongoing costs in storing the repossessed vehicle.
  • A statement of your rights.

They cannot legally sell the vehicle for a further 21 days from the issue of this notice. This can give you 5 weeks from the day of repossession to come up with the funds to pay for the loan and repossession if they’re slow at sending letters.

If you haven’t paid by the end of the 21 days, they sell the car for the best possible price. They’ll then let you know how much is still outstanding for you to repay. This will be your already outstanding loan plus repossession and sale fees minus the cost of the vehicle.

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The worst part is, all of this can happen even if you didn’t buy the car originally. If you bought an encumbered vehicle and the original owner defaults on their loan, you get to deal with the repossession process!

This is why getting a REV Check and PPSR Report from is so important.

A cheap REV check will tell you straight away if there’s an outstanding loan attached to the vehicle. You’ll even be able to contact the financial institute involved and find out more details. This can help protect you from having your “new” car taken from your hands.

Peter is a freelance writer with more than eight years of experience covering topics in politics. He was one of the guys that were here when the started.