If the borrower does not want the lender to repossess the car, they can contact the lender and work out a payment plan to bring the loan current. If the borrower is unable to make a payment plan, they can file for bankruptcy. Bankruptcy stops creditors from taking action to collect a debt, including repossession of a car.
If the borrower does not take any action, the lender will proceed with the repossession process. The lender will usually send a representative to the borrower's home or place of business to take the car. If the borrower is not present, the lender can get a court order to repossess the car.
Once the lender has possession of the car, they will usually sell it at a public auction. The proceeds from the auction will be used to pay off the loan balance and any other fees associated with the repossession. If there is a surplus, it will be returned to the borrower.
Car loan defaults can have serious financial consequences for borrowers. In addition to losing their car, borrowers may also damage their credit score. This can make it difficult to obtain loans in the future.
