A repo car, also known as a repossessed car, is a vehicle that has been taken back by the lender or financing company due to the borrowers failure to make loan payments on time. When a borrower defaults on their auto loan, the lender has the right to repossess the vehicle as a way to recoup some of the money owed. Repossession can be either voluntary, where the borrower agrees to return the car, or involuntary, where the lender seizes the vehicle without the borrower's consent.
Once the car is repossessed, the lender will typically sell it at an auction or through a private sale to recover the remaining balance on the loan. The sale proceeds are used to cover the unpaid loan amount, and if the proceeds are not enough to cover the debt, the borrower may still be responsible for the remaining balance. In some cases, the borrower may have the option to buy back the vehicle by paying the full amount owed, including past due payments, remaining debt, and repossession-related costs.
Repossession laws and regulations vary by state, but in general, lenders have the right to repossess a vehicle from any publicly accessible place, including the borrower's driveway or a public parking lot. However, they are not allowed to "breach the peace" during the repossession process, which includes using physical force, threatening the borrower, or damaging the borrower's property.
