If your car lender repossesses your car, truck, van, motorcycle or other vehicle, you may not be off the hook financially. If your car was underwater (you owed more than it was worth) you’ll likely still owe money to the lender, called a deficiency.
How much does it cost to repossess a car?
The lender repossesses the car and sells it at auction for $3,500. The lender incurs repossession and auction fees of $150. You would owe a deficiency of $8,350 ($12,000 – $3,500 – $150 = $8,350.).
What happens if you sell your car for more than what you owe?
Car Equity: If Your Car Is Worth More Than What You Owe Your car may be worth more than what you owe on the loan. This is what is known as having equity in the car. If your car sells for more than what you owe, you won’t have to pay the lender any more money and will get funds back from the excess amounts the car sold for.
Do you still owe deficiency if car sells for$ 2, 000?
In this situation, the lender will still sell your car, but there will be a difference between what it sells for, and what you owe. This is called the deficiency. If your car sells for $2,000 but you owe $10,000, the deficiency, which you now owe personally, is $8,000.
Do you have to go to court to repossess a car?
In most states, a lender doesn’t need to file a court action to repossess your car. Rather, as you may have seen on TV, a lender employs a tow truck driver to physically remove the car from your premises.
What happens to the surplus on a repossessed car?
Those funds are often referred to as a surplus. For example, if your car sells for $10,000, but you owe $7,000, you will receive the $3,000 surplus, minus any of the lender’s expenses incurred in repossessing and selling your car (these expenses can cost you a bundle).
How long does a car repossession stay on your credit report?
Any late payments, repossession and civil judgments remain on your credit reports for seven years. In addition, subprime lenders will typically not look at a loan application unless the repossession is over a year old.
