Repossed Cars – Repossessed Cars – Resources and Information

Many times, individuals who purchase vehicles are unable to honor the terms of the lending agreement. When this occurs, the original owner or lienholder has the right to reclaim the vehicle through repossession. Because of this, it is possible to obtain repossessed cars at extremely discounted prices. However, it is important to have a basic understanding of the repossession process and the best ways to find vehicles for sale.

What are repossessed cars?

When a buyer fails to keep current on payments for a vehicle and violates the conditions of a loan, the lender has the right to take necessary action to reclaim the vehicle. Independent agents or employees of the loan institution or lienholder are contracted to find and retake the vehicle through the process known as repossession. Ultimately, repossessed vehicles are often resold to individuals or at auction for extremely reduced prices in an attempt by the lending institution or lienholder to recoup revenue losses. If the vehicle is sold for less than what is owed, the original borrower is still responsible for any existing balance. If the vehicle is sold for more than the remaining loan amount, the original borrower will be issued a refund after all costs of reclaiming the vehicle have been deducted.

What happens when a car is repossessed?

When a car is repossessed, the lender or lienholder will send a contractor or company employee to find the vehicle and reclaim it through repossession. The conditions that apply for a repossessed vehicle depend upon the terms listed in the sales contract or lien. No notification must be given prior to repossession. However, the institution that repossessed the vehicle must give written notice to the borrower that they repossessed the vehicle and that there is a specified amount of time to reclaim it before it is sold. Anyone acting in the capacity of a repossession agent can take a vehicle at any time of day from any unsecured location as long as they do not break any laws or cause damage to property. Once the loan institution or lienholder has regained the vehicle and the proper amount of time has passed without payment, the repossessed vehicle can be sold at auction or to another individual.

Who is able to repossess a vehicle?

Any lending institution or lienholder may act to repossess a vehicle if the buyer has failed to honor the terms of the lending agreement. When this occurs, any person or agency acting on behalf of the legal owner or lending institution may repossess the vehicle. The requirements to act as a repossession agent vary from state to state. While some states institute license and bonding requirements, other more lenient about who acts as a repossession agent.

How are police involved in the automobile repossessions?

After an independent agent or employee repossesses a vehicle, they must call the police and notify them that they are acting on the behalf of the lending institution or lienholder. A repossession agent taking repossessed vehicles should have proper identification and paperwork showing that the lender or lienholder hired them to find and reclaim the vehicle on their behalf. With this information, the police will not interfere with the repossession as long as no laws are being broken. However, if a repossession agent threatens an individual or damages property, the police can act on the behalf of the borrower.

What happens to personal belongings that are left in repossessed cars?

Any personal belongings that are left in repossessed vehicles are cataloged by the repossessing agency at the time the vehicle is reclaimed. The company must send a complete list to the borrower’s last known address within 48 hours of taking the repossessed vehicle. This notice informs the borrower of the steps that must be taken to reclaim the possessions and the amount of storage fees that may apply. Items such as the spare tire and jack must stay with the vehicle. This includes any item that is installed permanently. However, if the borrower has proof that an item, such as a high-end stereo, was installed after the purchase of the vehicle, the item may be removed as long as the vehicle is returned with the original equipment.

Can you buy repossessed cars?

Yes, it is possible to purchase repossessed vehicles. When a borrower defaults on their loan, the lender must reclaim the vehicle. In order to recover their losses, the company will sell or auction repossessed vehicles at a substantial discount. Often, a people purchasing repossessed vehicles are able to save 40 to 70 percent off the stated value of the vehicle. Generally, the easiest place to find repossessed vehicles is at an automobile auction. Since most automobile auctions use a bidding system, there may be a guide price and reserve price on a vehicle. The guide price indicates the amount the auction house and seller believe the repossessed vehicle is worth. Many repossessed vehicles that are sold at auction have a reserve price. This price is the minimum amount of money that the seller is willing to take for the vehicle. The amount is not shown to bidders. However, the vehicle is shown as a “reserve price” vehicle.

How do you find repossessed vehicles for sale?

An individual interested in purchasing repossessed vehicles should begin by looking in the local newspaper classified ads. Many lending institutions or lienholders will list auction dates for repossessed vehicles. Their websites will offer information on purchasing repossessed vehicles. While the site may not show specific information on vehicles, contact information is generally available to use for inquiring about repossessed vehicles. Credit unions are known to sell their repossessed cars right out of the parking lot. Many local car dealerships contract with lending institutions to sell repossessed cars individually or at auction. When dealing with a car dealership that is known to stock repossessed vehicles, specifically ask the salesperson to show only the company’s inventory of repossessed vehicles. Vehicle auctions are sometimes restricted to individuals who possess a license to sell vehicle. So, in order to avoid wasting time, it is important to find out in advance what type of auction is being held.

How do I know if and when auctions are in my area?

An interested individual can find out dates for local auction of repossessed vehicles through a variety of sources. Credit Unions may post flyers in the local community or send notification directly to members showing the date, time, place, and items to be auctioned. Use the phone directory to locate local auction houses and call them for dates and times of auctions of repossessed vehicles. Call local car dealers and find out if they stock repossessed vehicles or if they have repossessed cars going to a local auction. If the auction is open to the public for individual purchases, information on the vehicle can be obtained prior to the auction date. Additionally, look for auction houses to list auction dates for repossessed cars. By cultivating contacts at auction companies and letting them know what type of vehicle is desired, a lot of time can be saved.

Are repossessed cars a good deal?

Yes, since repossessed cars can sell at 40 – 70 percent below the original price, purchasing repossessed cars is a good deal. However, in order for the purchase to be worthwhile, a buyer must be knowledgeable about the automobile in question and do necessary research to ensure that the vehicle history does not contain any information on accident that may have damaged the car in a way that would affect day-to-day operation. It is absolutely reasonable to request a car history on repossessed cars prior to purchasing or bidding on the vehicle.

Is it possible to purchase a repossessed car at auction for a small amount of money?

Yes, it is possible to purchase a repossessed car at auction for a small amount of money. In order to do so, individuals must go to auctions with a firm limit of how much money they are willing to spend on a vehicle and stick to that amount. A repossessed car at auction can quickly become overpriced when a bidding war occurs. Individuals should resist the temptation to “win at all cost” and stop bidding when the price has reached their preset spending limit.

What steps should a person take when purchasing repossessed cars at auction?

An individual who wants to purchase repossessed vehicles at auction should complete preliminary research prior to the sale in order to obtain the best price on vehicles. It is important to remember that repossessed cars sold at auction are sold “as is” and that they may have hidden body or mechanical damage that is not visible to the naked eye. For this reason, it is a good idea to take a trusted mechanic to the auction to help inspect the repossessed vehicles. While most auction houses do their best to disclose all known details about repossessed cars, sometimes substandard vehicles make their way to auction.

Study the vehicle history thoroughly. It provides knowledge on accident history for vehicles and any other type of disaster, such as flooding, that the vehicle may have been involved in. While slight accident damage may not impair vehicle operation, major damage that possibly bent the vehicle frame would ultimately affect the value and selling price of the vehicle.

Thoroughly inspect repossessed vehicles for rough patches in the paint edges that would indicate body work had been completed on the vehicle. Many times, the outer appearance of the vehicle may have been repaired to make it look better. However, by inspecting the vehicle pedals and steering wheel, a buyer can generally tell if this has taken place. Normally, these items are not replaced on a vehicle. So if the pedals or steering wheel are extremely worn, there is a good chance that more has happened in the vehicle history than has been reported. Once bidding on repossessed vehicles at auction has occurred and the final gavel is hit, the winning bid is legally binding. Remember, to inquire about the correct form of payment prior to the auction and have it readily available. Many individuals who are purchasing repossessed vehicles at auction receive preapproved loan letters from lending institutions. If this is the case, take this letter to the auction. Obtain a bill of sale from the seller and the lending institution will issue a cashier’s check payable to the seller.

Purchasing repossessed vehicles from a dealer, lending institution, or auction can save an individual large amounts of money on a quality car. By completely researching the vehicle and being knowledgeable about the vehicle market, the buying experience can be positive and overall rewarding.