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Vehicle Repossession

Vehicle Repossession

What is repossession?

When your car is taken away as a result of missed payments, this is called repossession. Repossession is an action that involves having your car transported back to the lender by a “repo man.” Typically, the lender will sell the car at auction and add the proceeds to the debtor’s loan.

Usually, it only takes one missed payment for someone to face being repossessed. However, relative to a person who has defaulted more than once, someone who has a history of making timely payments on their vehicle loan is at a lower risk of having their vehicle repossessed.

Following a vehicle’s repossession

Vehicles are typically repossessed by lenders in order to be sold or auctioned off to pay back the loan. If the sale price does not cover the full amount, you will be liable for the balance. The truth is that in addition to the loan, you will also be liable for the costs associated with repossession, late payments, and interest charges. By this time, you’ll be in a tight financial spot because you’ll still owe the lender money despite losing your car.

Repossession patterns in Canada

Repossession patterns in Canada

There are two distinct categories of repossession in Canada: voluntary and involuntary. Involuntary repossession happens when you don’t cooperate with the lender on a repayment plan. For instance, if the lender contacts you about an upcoming payment and you refuse to cooperate, this will result in an involuntary repossession. However, voluntary repossession occurs when you voluntarily return the vehicle to the lender after acknowledging that you can’t make the payments. You could save money by willingly turning in your car and avoiding the extra fees that come with involuntary repossession.

Will having your vehicle repossessed affect your credit?

Will having your vehicle repossessed affect your credit

Yes, not paying off debts will affect your credit score, making it more difficult for you to receive a loan in the future for a vehicle, house, or anything else. 

Your credit report will reflect a car repossession, whether it was voluntary or not, for up to seven years. Repossession of your vehicle informs lenders that you don’t consistently make payments on time or that your finances are unstable. But there are ways to bounce back. In the future, for instance, lenders might consent to lend you money, but at a higher interest rate. You will then need to demonstrate your ability to make timely and reliable payments.

How can a vehicle repossession be avoided?

Speak with your lender right away if you’re facing a financial crisis and won’t be able to make your payments on time. You will have a better chance of reaching an agreement the more persistent you are about the matter. Repossession is a precautionary measure used by lenders to make sure they can repay loan debt; most lenders don’t want to do it.

Talk to your lender about your alternatives for making payments. If you take early action, the lender may be willing to make concessions. It would be wise to seek advice from a debt expert at EmpireOne Credit if you are unable to satisfy your monthly obligations.

Selling your vehicle and attempting to get enough cash to settle the loan is another way to prevent having your car repossessed. You will need to submit your car for a voluntary repossession if you don’t want to do that. This would be preferable to involuntary repossession, despite the fact that there are still negative effects, such as harm to your credit score.


Your credit score being affected is the major problem with vehicle repossession. Each time you sense that you may have problems paying off your loans, don’t sit back. If you need advice before the situation escalates, call EmpireOne Credit. We have debt experts who are always there to lead you and give you advice on how to go about it. There are debt solution options available to get you out of debt’s nightmare. Contact us right away for a free consultation.

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