So, your car has been repossessed, and you are left wondering. “How much do I need to pay to get it back?” Not to fear—you’re not the first, and certainly not the last.
Various financial and life circumstances can lead to a repossession (repo) of your vehicle. Whether it’s a missed payment, other commitments, loss of income or simply lack of oversight, repos are a reality that many individuals face.
First Off, What Exactly Is A Car Repo?
A car repo, short for repossession, occurs when an individual borrows money to purchase a car but is unable to repay it.
When you take out a car loan, it’s secured against the car you’re buying. This security gives your lender the ability to legally repossess the car you purchased if you default on the loan or break the loan agreement in any other way. When this happens, the lender will repossess the car and sell it off in order to help repay the unpaid loan balance that you owe.
How Much Do You Need To Pay To Get Your Car Back After A Repo?
To regain access to your vehicle following a repossession, Canadians generally have two options at their disposal:
1. Pay Off The Outstanding Balance
The most straightforward way to get your car back after a repossession is to pay off your outstanding balance. This includes:
Missed payments + repossession fees + additional costs and accrued interest.
2. Negotiate A New Payment Plan
Look, the lender does not want to deprive you of a vehicle. They simply wish to ensure they receive their lent funds back.
Thus, some creditors may be willing to settle on a new payment plan. Not all lenders will be receptive to this, nonetheless it is certainly worth a shot if you’re willing to attempt to negotiate.
What Exactly Happens After Your Car Is Repossessed?
When your car is repossessed, the lender will auction it off to help pay off the outstanding debt balance.
In the event that the auction price doesn’t cover the full amount you owe, unfortunately you are still on the hook for the remaining balance—meaning you’ve lost your car and you still owe money.
For example, let’s assume you have an outstanding balance of $40,000. Due to some missed payments, your lender repossessed your car and auctioned it off for $30,000.
This means you’d still owe the lender $10,000 ($40,000 loan balance less $30,000 auction sale price) even after your car has been repossessed.
| Do Car Repossessions Affect Your Credit? A repossession can damage your credit score. Not only can the missed payments affect your credit, but a car repo, will lead to a R8 credit rating, which is the one above the worst rating you can get. This will remain on your credit report for up to 7 years. This can make it more difficult to get future loans, and also makes future financings more expensive (higher interest rates). |
Understanding Your Rights When Your Car Is Repossessed
Getting your car repossessed can be scary and uncertain. Your rights during a car repossession can vary based on your contract details and the laws of your province. If you live in Ontario, here’s what you can expect:
Does The Repo Man Have To Give You Notice?
Repossession rules can vary from province to province, but in most areas, including Ontario, the bailiff does not need to provide you with an advance notice before repossessing your car.
However, they must identify themselves when asked by showing proof of their appointment or registration.
Can You Be Charged Extra Money For Your Car Being Repossessed?
Yes, charges related to the repossession of your car can be added to your debt. Examples of this include repossession fees, storage fees, towing fees, auction costs etc. This comes on top of your debt, which can make getting your car back much more expensive.
What Happens To Your Personal Belongings If Your Car Gets Repossessed?
Personal belongings cannot be thrown away or auctioned off with the car. You are legally entitled to retrieve them if you car is repossessed while the items were in there.
Who Is Can Repossess Your Car?
Only a bailiff with a certificate of appointment has the right to repossess your car. Lenders may also repossess your car using their employees, however, they cannot use independent contractors.
Similarly, a tow-truck cannot repossess your car without a bailiff or assistance bailiff present. The only cases they may do so without a bailiff is if they themselves have been appointed as a bailiff or registered as an assistant bailiff. Any other unauthorized individual has no right to take your vehicle.
Car Repossession Loopholes In Ontario
How about we dive into some car repossession loopholes In Ontario that can bide some time and help to protect your rights.
- Bailiffs must leave if you tell them. This is a crucial one. Believe it or not, if a bailiff (or assistant bailiff) shows up to take your car, you have the right to ask them to leave your property. They are legally obligated to listen unless they possess a court order, or you voluntarily surrender your vehicle. You can use this to your advantage to buy some extra time and figure out if you can potentially pay off the vehicle or sell it.
- If two-thirds of the loan are paid off, a court order may be required. To avoid your car from being repossessed, it’s important to ensure at least two-thirds of your loan is paid. When your loan is two-thirds or more paid off, a lender needs to obtain a court order (which isn’t easy to acquire by any means) to repossess your car. This loophole can make repossession a much lengthier and difficult ordeal for creditors. This gives you more time to figure out your plans much like the first loophole.
Digging Deeper: What Is A Breach Of Peace?
Another important piece of terminology to know is that a ‘breach of peace’ occurs when a repossession involves the use of any force or causes a disturbance.
Repossession agents or bailiffs cannot legally break into your garage or cause any sort of public disturbance when taking your vehicle. If they do, you may have legal grounds to challenge the repossession.
When Can Your Car Be Repossessed?
Your lender is unquestionably well within their legal rights to repossess your car if you default on the loan or break the terms of your contract.
For example, this typically occurs when missing payments or failing to meet other obligations in the financing agreement.
You aren’t the owner of the car until the loan is fully paid off since the funds borrowed to purchase the car have a lien on it. A simple way of saying that is the lender has rights over the vehicle.
Note: However, if you paid off more than two-thirds of your loan, then the lender may need a court order to repossess your car.
Notably, this may vary from province to province. However, in Ontario, the requirement for a court order could make it significantly more difficult for a lender to repo your car.
Learn more about your rights when dealing with a bailiff in Ontario here.
Bottom Line – Stay Within The Lines
Dealing with a car repossession is stressful, but it is very important to understand your rights and options.
The amount that you ultimately owe will depend on the amount of the outstanding loan and what your car is worth at the time of auction. It will also depend on the additional fees that the lender may incur when repossessing your car.
To protect yourself from such scenarios, avoid taking out large loans on car purchases that you may not be able to afford down the road. Similarly, consider purchasing a cheaper or used car outright with cash to avoid all the above hassle, repossession fees, interest costs and the negative impacts to your credit score.
