top of page

Repossession: 5 Things You Should Know

Updated: Nov 24, 2022

What to do If Your Car is Repossessed

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.

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.”


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.

How Will My Car Get Repossessed?

What Happens When Your Car is Repossessed

Dealers and banks usually hire a professional called either an investigator or repossession agent, who has keys to the car or other methods of reclaiming it. They often come at night or when the owner is believed to be away. However, 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.

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.

How does repossession affect my credit?

How Long Does Repossession Stay On Your 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. Learn How to get your free credit score here.

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

Can I Get an Auto Loan After Repossession?

How to get a 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.

Read More:

-How To Get Your Free Credit Score and Report

-Top 3 Credit Saving Hacks

-Understanding Your Credit History Report