If you acquire a new car either through a hire purchase or a lease, then you are technically only the registered keeper of the vehicle and you’re not the owner (not unless you send the final purchase payment at the end of a hire purchase deal anyway).
In such circumstances, it is possible for a scenario to occur which will lead to your car getting repossessed. Since a car tends to be the second biggest purchase an individual makes, getting it repossessed is something you’ll obviously want to avoid.
In this guide, we explain how repossession of a vehicle works and how you can get your car back if it ever ends up repossessed.
How does repossession of a vehicle work?
When a motorist enters into a contract with a creditor or lessor for a car, they agree to certain terms and conditions. Often included in these is a contractual term that allows the creditor to repossess the car under certain circumstances.
An example is if the customer becomes unable to maintain monthly payments which were agreed at the start of the contract. If the customer has already paid for at least one-third of the goods however, then it may not be possible for the creditor to repossess the vehicle without a court order first.
Other reasons a creditor may repossess a car includes if the customer failures to adequately insure the vehicle they’ve been given or properly maintain the vehicle.
If the creditor decides vehicle repossession should take place (and it can do so), then it will usually happen around seven to nine days after their decision and the customer should receive advanced notice.
What to do when your car gets repossessed
When a creditor has repossessed a car, it may decide to remarket/sell the seized car and pursue what’s known as the ‘shortfall’ debt. This, in other words, is the difference between the amount owed by the customer under the (now breached) finance agreement and the amount raised by the sale of the car.
If your car gets repossessed, it’s wise to get in touch with your creditor/lessor as soon as possible to discuss options in terms of repayment of a shortfall debt. Creditors will generally prefer to sort out a payment arrangement rather than resorting to enforcing the debt through the courts. That’s not to say that a creditor won’t consider court action if there are no clear alternative options.
If a revised payment arrangement can be agreed with your creditor/lessor then reclaiming the seized vehicle should be possible to arrange, although delivery will need to be arranged and the creditor may have concerns about whether you may fall behind on payments again.
It is generally much better to prevent the repossession of your car from happening in the first place, rather than disputing it after it occurs. This is possible with good enough communication, so get in touch with the creditor as soon as you realise that a payment will be late, or you know your financial circumstances are set to change.
Most lenders will do what they can to help in these circumstances, but you may want to consider independent advice, which is available from various sources. For instance Debt Management Companies (DMCs) will negotiate with creditors on your behalf, though they will charge a percentage of the monthly amount you pay towards your debt.