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How Many Months of Default before Repossession?

I am having trouble making the lease payments on my vehicle. How many months can I get behind until my car gets repossessed?

There is no standard requirement. A vehicle can generally be repossessed after one payment is missed. Most lenders will work with you if you want to repay and have the ability to repay within a reasonable period of time.

What you should be doing is calling your lender and explaining what happened, and what your plan is to catch up on payments. With income tax refunds expected, that may be one way to catch up your payments.

If you are behind and do not expect to be able to repay the loan, relinquish the car. If the lender has to pay $800, $1,000 or whatever amount to get the car repossessed, that will be paid from the sale of the car. That means you pay it in the long run and owe even more than you do now.

A repossessed vehicle is sold and the proceeds are applied against the loan. If the loan, interest, fees (those repo fees included) and other costs are fully paid from the sale, you will owe nothing or will get money back. In today's economy, there will more likely be a deficit still owed. That is money you still have to pay. If you refuse, the lender could sue. It will adversely effect your credit for years to come, and the lender may eventually give up trying to collect that money and write it off. They then report that to the IRS as taxable income for you. Who wants to pay income tax on the cost paid to repossess their car?

If your car will pay off the loan, try and sell it yourself. You will get a better price than a lender. Please, call your lender and try to work it out.

Published on 4/16/09