Types of Repossession
There are two major types of repossession. Voluntary repossession is when you give your car back to the lender. With involuntary repossession, the lender comes to take back the car. The lender can sometimes take the car from your property without your permission as long as they do not disturb you or your neighbors.
If your vehicle is repossessed - either voluntarily or involuntarily - your auto loan is not cancelled. Unfortunately, you still owe the balance due on your loan even after the vehicle is repossessed. Your auto lender can continue to collect on the auto loan. They can even sue you for a deficiency judgment which will include the balance due on the loan and costs associated with repossessing the vehicle.
Repossession Impact on Your Credit
Repossession has a negative impact on your credit. First, the late payments leading up to the repossession will damage your credit score. Then, the repossession itself will be listed in the public records section of your credit report. If the lender obtains a deficiency judgment for the balance of the auto loan, that judgment will also go on your credit report. These negative items will remain on your credit report for seven years.
