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Auto Repossession: 5 Things You Should Know

Updated: May 7

What to Do if Your Car is Repossessed in Ohio

Those facing repossession can be left in a tough position; not only will they be left without a vehicle, but stand to suffer a negative impact on their credit score. If your vehicle has been repossessed there are a few things you should know.

1. What is Repossession?

“Repossession is the term used to describe the taking back of property after a borrower has defaulted on payments. The lender either repossesses the collateral or pays a third-party service to do so.”-Bankrate

In terms of auto loans, repossession is when a lender takes back the vehicle, voluntarily or otherwise. Repossession is most often due to non-payment but can happen for other reasons, such as false information on loan documents.

What If I Voluntarily Return My Car?

Most people who are subject to repossession and cannot come to an agreement with the lender will opt to voluntarily release the property. Returning your vehicle this way prevents any third party from getting involved and could possibly save you some embarrassment. You can contact your lender directly to make these arrangements.

Voluntarily returning your vehicle does not absolve you of any liability or the debt you may still owe to the lender. It is simply an easier way to get through the repossession process. You will still have to cooperate with the lender and will owe any outstanding balance. Likewise, either method will appear on your credit report.

2. How Will My Car Get Repossessed?

What Happens When Your Car is Repossessed

In Ohio, the repossession process typically commences once you default on your loan, which may happen as soon as a payment is missed. However, it often takes place once payments are 90 days overdue. Lenders do not require a court order to initiate the repossession process, and they generally contract specialized third-party companies to repossess vehicles.

There is no mandatory requirement for the lender to inform you prior to taking your vehicle. Some states, including Ohio, even allow the use of technology such as kill switches to facilitate repossession. After the vehicle is repossessed, the lender usually opts to sell it privately or at auction to recover the debt.

It's crucial to remember that Ohio has specific rules regarding repossession. The process cannot involve breaching the peace, and there may be opportunities for redemption or reinstatement of the car loan. For specific laws and regulations in Ohio, borrowers can refer to the loan terms, visit the Ohio Attorney General's website, or seek assistance from a legal agency.

It is never wise to interfere with repossession in any way. The property in question belongs to the lender and they are lawfully taking possession of it through this third party. There is no legal protection for someone who attempts to protect their property or prevent repossession which can often lead to criminal charges.

3. How Does Repossession Affect My Credit?

According to the TransUnion Credit Report User Guide, a repossession will show up on your credit history report under “Manner of Payment” either as a code 08 for repossession or a code 08a for a voluntary repossession.

This will likely be in addition to any late payment reports that have accrued on your credit leading up to repossession. If your repossessed vehicle is sold at auction you may also see a collection on your credit report. This will be the amount difference between what the vehicle was sold for and what you owed to the lender.

Repossession will undoubtedly leave a serious blemish on your credit history but the extent of the change will largely depend on your credit score before the repo. A great credit score could see a significant drop, while a poor score may not drop so drastically in number. Payment History accounts for 35% of your FICO score. However, regardless of your score after a repossession, the negative report itself will affect your buying power.

How Long Does a Repossession Stay on Your Credit in Ohio?

A repossession will stay on your credit report or seven (7) years.

4. Can I Get an Auto Loan After Repossession?

The short answer is yes, you can obtain an auto loan after repossession. Depending on how long ago it was reported to the credit bureaus, you may qualify for credit amnesty and forgiveness programs through traditional lenders. If your repo was very recent or you have poor credit you may be charged higher rates due to the increased risk associated with your credit.

Alternatively, one can turn to Buy-here pay-here lots. These dealerships have in-house financing and can help people who do not qualify for traditional bank loans. A buy-here-pay-here could be a good option for building credit if they report your payments to the bureau, Otherwise, some dealers will approve you with no credit check, however, your on-time payments will not contribute to building your credit. This can be a good option for people who do not want to deal with credit checks or banks. To find out if you qualify for an auto loan after repossession you can get prequalified online by comparing auto loan offers.

5. Understanding Your Rights

Ohio Repossession Rights

Your auto lender is required to provide you with a written notice of default before they can proceed with the repossession. This notice should outline your rights, including the right to redeem the vehicle by paying off the loan and any costs associated with the repossession. However, if you have defaulted on your loan agreement more than once in a year, the lender is not required to provide this notice.

Ohio law also protects consumers from "deficiency judgments". This means if your repossessed vehicle is sold and the proceeds do not cover the total amount you owe, the lender cannot sue you for the remaining balance. This is a major protection that can save you from further financial hardship.

During an auto repossession, you have certain rights that must be respected by the repossession agent and the lender. Firstly, as stated earlier, the agent cannot "breach the peace" during the repossession process. They cannot forcibly remove you from the vehicle, nor can they cause damage to your property during the repossession.

Secondly, you have the right to retrieve your personal belongings from the repossessed vehicle. The repossession agent is obligated to provide you with a reasonable opportunity to remove your personal items from the vehicle. They cannot hold your belongings hostage or charge you a fee to retrieve them.

Finally, you have the right to redeem your vehicle. This means you can pay off the remaining loan balance and any associated repossession costs to regain ownership of your vehicle. You also have the right to reinstate your loan agreement under certain conditions.

How to Prevent Auto Repossession in Ohio

Preventing auto repossession begins with understanding your loan agreement and making timely payments. However, if you find yourself unable to meet your payment obligations, there are several steps you can take.

Firstly, consider contacting your lender to discuss your financial situation. They may be willing to modify your loan agreement, reduce your interest rate, or grant you a temporary payment deferral.

Secondly, you can sell the vehicle yourself and use the proceeds to pay off your loan. This is often a better option than allowing the vehicle to be repossessed, as it can prevent damage to your credit score and avoid additional repossession costs.

Finally, if you're dealing with significant financial hardship, you may want to consult with a bankruptcy attorney. Filing for bankruptcy can provide temporary protection from repossession and allow you to restructure your debts.

Ohio Repossession Auto Loans


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