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If you lease or finance your car, it still belongs to the lender until you’ve paid it off entirely. The company also has the power to seize it if you fall behind with your payments.
Repossession isn’t an easy process to go through, and it can have consequences for your financial future too. However, you do have option to recover from having your car taken away from you.
If your car is leased or financed, it isn’t officially yours until the debt is paid. It remains the property of the lender, who will have the right to repossess your vehicle in the following situations:
How quickly a lender can repossess your car boils down to what type of lease or finance agreement you have. With both a personal contract hire (PCH) and a personal contract purchase (PCP) deal, the lender can repossess the car at any time.
However, with a personal contract purchase, the company will need to get a court order if you’ve already paid at least a third of the amount.
The lender will have to give you at least 14 days’ notice if it’s planning to repossess your car, and it will give you the chance to remedy the default.
So if you’ve fallen behind on your payments and you suddenly have an influx of cash, you could try and settle the debt. Should the lender go forward with the repossession, the lender will try sell the car off for market value.
If the car sells for less than what you owe, you may be required to pay the difference – or face being pursued in court.
Repo agents are legally allowed to take back the car, but there are restrictions on how far they can go. They can’t clamp or tow your vehicle if it’s inside a locked garage for instance.
However, they can put a clamp on your car or tow it away if it’s parked in your driveway or in a public place like a road or car park – or even if it’s left in an unlocked garage.
You have options. But if you want to get your car back, you’ll need to act quickly. There are a few different paths you can take:
Before you go down any of these routes, you need to consider if you can actually afford to keep your car. Will you be able to keep up with the payments as well as insurance, maintenance costs and petrol expenses? If you don’t think you can, then it might be worth saying goodbye to your car and waiting until you can afford one.
If you’ve been handed a repossession notice or your car has been taken away already, here’s what you should do:
Yes. A lender can terminate your contract and repossess the car if you breach your contract in any way. Given all insurers will require you to take out car insurance, driving uninsured is a clear way of breaking your end of the bargain.
In fact, almost all lenders will insist you take out a fully comprehensive deal while you’re paying off the loan because they want to protect their asset.
This is all without mentioning the fact that driving uninsured is illegal in the UK. You could be hit with a massive fine and even lose your licence.
It depends on your situation. Should you be looking to reclaim your car after it’s been repossessed, it’s best to keep your car insurance coverage active.
This way, if it all works out, you won’t have to explain to your insurer that you let your insurance lapse. If you let it lapse, it could lead to higher rates and a harder time getting a new policy.
Before doing this though, double-check that your lender hasn’t taken out insurance for the car since taking back possession of it. In this instance, there would be no point in having coverage and you should cancel it.
If your car has been repossessed and you’re waving goodbye to it, consider keeping your policy until it’s out of your possession. This is also a good idea if you plan on getting another car soon.
You could get a better rate, or even a discount, by keeping your insurance going and making sure there isn’t a break in your coverage.
Car repossession is a stressful and worrying process, especially if you’re going through a period of financial difficulty. However, there are still options.
If you want to hold onto your car, get on the phone to your lender and see if you can work something out. In some cases, it might be best to just cut your losses. Try to pay off at least half of the deal and you could be able to voluntarily terminate your contract and maintain a good credit rating.
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