How to Negotiate Auto Reposession


Automobile repossession is the legal authority of a lender to retrieve its collateral if the borrower defaults. Circumstances vary by situation, but in general, when a borrower misses three consecutive payments, the lender issues two documents: a Notice of Default and an Intent to Repossess to the borrower. The lender then contracts with a third party recovery service to physically retrieve the vehicle. After the vehicle is retrieved, the borrower’s personal property inside the vehicle is returned, and the car sold at auction. To avoid repossession, follow a few steps.


How to Negotiate Auto Reposession

How to Negotiate Auto Reposession


1. Determine Courses of Action That Best Fit Your Particular Needs

Start the negotiation when you begin receiving collection calls. In general, the options for negotiating an auto repossession are asking that the loan term to be extended to lower the monthly payments. You can request an extension of 30 to 60 days to bring the loan current during which time no other penalties are assessed. Or you can ask that the missed payments be placed at the end of the loan. As an example, if the loan expires in 30 months and you missed two payments, those missed payments will be made after 30 months are up.


2. Prioritize Your Options to Meet Your Circumstances

If you are moving from one job to another and are in a temporary bind, ask for an extension. If your income has been reduced, ask to extend the loan term. If you are starting a new job but have missed payments, ask for the arrears to be tacked onto the end of the loan.


3. Meet or Phone the Lender

Speak with a manager or someone who has the authority to modify your loan or grant an extension. Explain your situation and review your list of options to see which are acceptable by the lender. Once an agreement is reached, get it in writing.


Tips & Warnings

  • Act immediately if you fall behind. Contact your lender to make arrangements.
  • If your auto loan is with the same bank that holds your checking and/or savings account, by law, the bank is allowed to debit your account to satisfy the missed payments.
  • In the event the automobile is repossessed, the bank has the legal right to sue you for the loan balance and the costs of repossessing the vehicle as well as auctioning the car.


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