Can My Car be Repossessed Without Warning?

Question:

I am behind on my car payments. The bank hasn't sent me any delinquent notices, but my neighbor saw someone lurking around my driveway recently. Could it have been the "repo man" coming to take my car away without my permission?

Answer:

Unless your driveway is a particularly attractive lurking spot, your repo man theory is a good one. In many states, if you are behind in your car payments, the lender can "repossess" your car without warning or even leaving a calling card. The lender (or, more likely, the repossession company that the lender hires) can hotwire your car or use a duplicate key and drive it away from any location. The only limitation is that they can't illegally enter your locked home or garage.

Don't wait around for that lurking repo man to find your car. Instead, take action. First, determine whether your inability to pay your car note is temporary or long-term. If it's temporary, immediately contact your lender, explain your situation, and try to work out a short-term solution (maybe adding the missed payment to the end of the loan term). Or, borrow money from friends or family to get current on your car loan.

If your situation will be long-term, you should still contact your lender and try to buy some time. Then, sell the car yourself and use the proceeds to pay off your car loan. If you let the lender repossess the car, it will sell the car to cover what you owe on the loan and also charge you fees for repossession, sales costs, and the like. And if the sales price is less than what you owe (including all the extra fees), you will still owe the lender money even though you no longer have a car to show for it. It's far better to sell the car yourself — you'll get a better price, won't be charged extra repossession and sales fees, and may even have some money left over after you pay off the loan.