If you borrowed money to buy or lease your car or truck, the business or bank that loaned you the money is called the “lender.” You probably signed a contract about the loan with the lender. Most loan contracts for cars and trucks say that if the borrower “defaults” (misses payments) the lender can “repossess” (take back) the car or truck. Most vehicle loan contracts say you default even if you only miss one payment. Look at your loan contract to find out if this is the case for you.
Did you default? If so, the lender can take your car or truck back without going to court. The lender doesn’t have to tell you ahead of time that it’s going to take back your car or truck. When your lender takes back your car or truck it’s called “repossession.”
You should avoid repossession if you can. If your lender repossesses your vehicle, it will probably sell it for a very low price. If your lender sells your car for less than it’s worth, it will still try to make you pay the loan. You could lose your vehicle and still have to pay for it. Your lender will probably charge you a repossession fee.
Plus, missed payments and repossessions are reported on your credit report. This will hurt you when you want to apply for credit cards and other loans.
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