1. Inventory and Storage: The repossession company takes physical possession of the vehicle and creates an inventory of its contents. The car is then usually transported and stored in a secure facility until it's ready for sale.
2. Loan Company Notification: The repossessed vehicle is returned to the financial institution or lender that holds the loan. The lienholder becomes responsible for handling the sale of the car to recover the remaining balance of the loan.
3. Repossession Sale: The lender typically sells the repossessed vehicle through a public or wholesale auction. Dealerships, salvage yards, and individuals may participate in these auctions to purchase the car.
4. Loan Deficiency: After the sale, if the amount obtained from the sale doesn't cover the outstanding loan balance, the borrower is usually held responsible for the remaining debt known as a "deficiency balance." Some states allow for the lender to seek legal action to recover this deficiency.
5. Sale Proceeds Distribution: The proceeds from the sale are used to settle various costs related to the repossession process, such as towing fees, storage expenses, auction expenses, and any other associated costs. Any surplus funds may be sent to the borrower.
6. Redemption or Reinstatement: In some cases, borrowers may have the opportunity to "redeem" their vehicle by paying the full outstanding loan amount plus associated costs within a certain timeframe specified by law or as permitted by the lender's policies.
It's important for borrowers to understand the repossession laws, regulations, and procedures in their jurisdiction to navigate this process effectively.
