For many individuals, a car is far more than just a convenience. It is a necessity—a means to commute to work, run errands and manage daily life.
Unfortunately, for those grappling with debt, the prospect of losing such an essential asset is real. Losing one’s way to move around through repossession can be daunting and devastating. It may be important for individuals grappling with debt to understand how car repossessions happen. This way, they can keep an eye out for warning signs and hopefully prevent car repossession.
Understanding car repossession
When a motorist acquires a vehicle through an auto loan, they are required to make continuous payments until the loan is fully paid. If they are unable to make these payments over an extended period, a car repossession can occur.
A car repossession is when an auto loan lender takes back a vehicle to recover their losses. Since auto loans are secured loans, the car itself serves as collateral. Therefore, if the motorist defaults on auto loan payments, the lender has the legal right to reclaim the motorist’s vehicle. The scary part about car repossessions is that they can happen without prior notice.
The process of repossession
Defaulting on an auto loan can trigger the process of repossession. Some lenders may send reminders to encourage borrowers to make payments before taking any adverse actions. However, most lenders are inclined to take more severe action if the borrower does not catch up with payments.
In New Jersey, lenders are not required to notify borrowers before repossessing a vehicle. Lenders who notify borrowers before repossession do so out of courtesy. Following repeated missed payments, some lenders may also attempt to communicate with the borrower to explore alternative solutions before resorting to repossession.
If all these efforts fail, most lenders will collaborate with a repossession agent to retrieve the borrower’s vehicle. These agents are often allowed to tow the car from public spaces or private property. The purpose of car repossession is for the lender to sell the car at auction to recoup the outstanding loan amount.
Car repossession is a difficult experience that most motorists do not want to endure. Borrowers may potentially avoid losing their vehicle by understanding the repossession process, recognizing warning signs and seeking legal support.
