Tag Archives: repossession

financing a repo car

Tips for Financing a Repossessed Vehicle Purchase

Purchasing a repossessed vehicle can offer a unique opportunity to acquire a car at a potentially lower cost, but it comes with its own set of challenges, especially when it comes to financing. If you’re considering financing the purchase of a repossessed vehicle, here are some valuable tips to help you navigate the process and make informed decisions.

Understand the Repossession Process

Before diving into financing, it’s crucial to understand the repossessed vehicle’s history. Know the reasons for repossession, its current condition and any potential issues that might affect the vehicle’s value and performance. Many repo cars are in great condition, but it’s still important to do your due diligence. Since there is no warranty, you’ll inherit whatever problems the vehicle has. 

Check Your Credit Score

Assess your credit score before seeking financing. A higher credit score can help you qualify for better interest rates and loan terms. If your score is lower, take steps to improve it before applying for a loan. If you don’t have time to wait, expect higher interest rates. A low credit score doesn’t make buying a vehicle impossible! 

Research Financing Options

Explore various financing options, including traditional banks, credit unions and online lenders. Some institutions specialize in providing loans for repossessed vehicles, and they may be more willing to work with individuals who have experienced financial challenges.

Budget and Affordability

Establish a clear budget that takes into account the cost of the repossessed vehicle, taxes, fees and potential repair costs. Ensure that the monthly payments fit comfortably within your budget to avoid financial strain. Buying a new car is exciting, and it’s tempting to go overboard, but you’ll have this payment for years to come. 

Consider a Pre-Approval

Obtain pre-approval for a loan before shopping for a repossessed vehicle. Pre-approval provides a clear understanding of your borrowing capacity and allows you to negotiate with confidence when making a purchase. Pre-approvals can be especially attractive when placing a bid. 

Down Payment

Save for a substantial down payment. A larger down payment not only reduces the amount you need to finance but can also improve your chances of securing favorable loan terms. Creative ways to save for a down payment include getting a second job (Uber, Lyft), trading in your current car, refinancing your home or automating your savings. 

Explore Specialized Lenders

Some lenders specialize in financing repossessed vehicles. Research and contact lenders who have experience with these types of transactions, as they may be more flexible in their loan terms. Some of the sellers on RepoFinder.com do exactly this! 

Shop Around for Rates

Don’t settle for the first financing offer you receive. Shop around and compare interest rates, loan terms and fees from different lenders to ensure you secure the most favorable financing package. Doing this in advance gives you time to make the best decision. 

Inspect the Vehicle Thoroughly

Before finalizing the purchase, thoroughly inspect the repossessed vehicle. Consider obtaining a professional mechanic’s inspection to identify any potential issues that might impact its value and safety.

Read and Understand Loan Terms

Carefully review and understand the terms of the loan agreement. Pay attention to interest rates, repayment schedules, and any additional fees. Seek clarification on any terms that are unclear before signing the agreement.

Negotiate for Better Terms

Don’t be afraid to negotiate with the lender for better terms. If you have a good credit history or a substantial down payment, you may be in a position to secure more favorable interest rates or flexible repayment terms.

Be Wary of Predatory Lenders

Exercise caution and be aware of potential predatory lenders. Some lenders may take advantage of individuals seeking financing for repossessed vehicles. Ensure that the lender is reputable and transparent in their dealings.

Get Financing and a New Repo Vehicle

Financing a repossessed vehicle requires careful consideration, research and financial planning. By following the tips above, you can make a well-informed decision that aligns with your budget and financial goals.

Shop for repossessed vehicles on RepoFinder.com. We have a large directory of banks and lenders selling their repo inventory at a discounted rate. Many are also able to provide financing for a one-stop shopping experience! 

repossessed truck

The Process of Repossessions: What Happens to Vehicles

Repossession is a legal process through which a lender reclaims a property, often a vehicle, when a borrower fails to meet the agreed-upon financial obligations. While the term might carry negative connotations, it’s not all bad. 

For one, people can opt for voluntary repossession, which can help with reaching a settlement and keeping repossession off the credit report. Second, repossessed cars sold to the public present an opportunity for car buyers looking to score a great deal. 

If you are thinking about buying a repo car, it’s helpful to understand where these vehicles come from. There’s a common misconception that repossessed cars are in poor condition, but this is not necessarily the case. 

Understanding the Repossession Process

Default on payments 

The repossession process typically begins when a borrower defaults on their loan payments. This could be due to financial hardship, unexpected circumstances or other challenges that make it difficult for the borrower to meet their financial commitments.

Notice of default 

Prior to repossession, the lender usually sends a notice of default to the borrower, informing them of the missed payments and providing an opportunity to rectify the situation. State laws and the terms of the loan agreement dictate the specific notice requirements.

Repossession order 

If the borrower fails to address the default, the lender may obtain a repossession order, empowering a third-party repossession agent to locate and recover the vehicle. Repossession agents must follow the laws and regulations to ensure a lawful and non-confrontational process.

Vehicle recovery 

The repossession agent locates and recovers the vehicle, adhering to legal guidelines. They may tow the vehicle or drive it away, depending on the circumstances and local laws. It’s crucial to note that self-help repossession (taking the vehicle without a court order) is illegal in many jurisdictions.

Notification of repossession

After the vehicle is repossessed, the borrower is typically notified of the repossession. The notice may include information about the location of the vehicle and the process for redemption.

Post-Repossession Fate of Vehicles

Redemption period

Some jurisdictions provide a redemption period during which the borrower can reclaim the vehicle by paying the outstanding balance along with repossession and storage fees. The length of this period varies by location and the terms of the loan agreement.

Auction or private sale

If the borrower doesn’t redeem the vehicle, the lender may proceed to sell it to recover the outstanding debt. This can be done through auctions, private sales or other authorized means. The proceeds from the sale are applied to the outstanding balance.

Deficiency balance

If the sale of the repossessed vehicle doesn’t cover the entire outstanding balance, the borrower may still be responsible for the deficiency. Lenders may pursue legal action to collect the remaining debt.

Save Money with a Repossessed Vehicle  

The repossession process is a complex legal undertaking that involves adherence to strict guidelines to protect the rights of both borrowers and lenders. By the time a repo car is listed for sale, you can expect that it has gone through these steps and is waiting for a new owner. Contrary to popular belief, repossessed cars are often in good condition with only light maintenance needed. To shop for repossessions in your area, visit RepoFinder.com today. 

buying a repo car

Does a Repossession Change the Title or Warranty Terms on a Car?

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Buying a repossessed car is a great way to save money. There’s a misconception that repossessions are old and in terrible shape, but this isn’t necessarily the case. While there will always be fixer uppers on the market, many of the cars that are repossessed by banks and lenders are newer. It’s just that their owners could no longer afford the high payments. 

When you consider that the average monthly payment for a new car is $700, you can quickly see how cars end up in repossession. Most repo cars are picked up by dealerships and then resold as used vehicles. However, at this point, they’re also getting a markup from the dealership. This means that you’re not paying true repo prices. 

RepoFinder.com works differently. We offer a directory with links to banks, lenders and credit unions all over the United States. They have repo inventory they want to sell, and they sell it to the public – not to dealers. Therefore, you do not need a dealer’s license. You can simply browse the available vehicles in your area and place a bid when you find one you like. 

Do Repo Cars Have a Clean Title? 

A common question that people ask is whether or not repossessions have clean titles. The answer: Yes. At least, they should. We do not recommend buying vehicles without a title, as this can lead to problems down the line. You could be paying for the vehicle, driving it around and maintaining it, and the ‘true’ owner can come back with the title. 

The car you buy should have a title. A ‘clean’ title means that the car was never determined to be a total loss. Other types of titles you might come across are a salvage title and a rebuilt title. It’s best to avoid salvage titles. Rebuilt titles may be okay. 

Titles show who owns the vehicle, and ideally, you want them to be clean. But a vehicle being a repossession has no bearing on the title. 

Do Repos Include a Warranty? 

As for the warranty, it’s well-known that repossessions don’t include a warranty like you would get from a dealership. You are buying the vehicle as-is, which is why you get a steep discount. In exchange for this discount, you are agreeing to take care of whatever problems the car has. It could be minimal maintenance and repairs, or it could be major issues. That’s why we always recommend having a full inspection done.

But, if the vehicle still has its original manufacturer warranty intact, a repossession will have no bearing on it. The warranty will roll over to the new owner, and you are free to use the warranty as you need it. You can also consider purchasing an extended warranty on your own. Extended car warranties aren’t always worth the money, though, so do your research. 

Bottom line: Repossession doesn’t change the title or warranty on a vehicle. If the car you’re interested in has a clean title and manufacturer warranty, this will be passed down to you. To browse the repo cars in your area, visit RepoFinder.com today! 

leased car

Can a Leased Car Get Repossessed?

Approximately one out of four vehicles is leased each year. While this option isn’t for everyone, it can offer benefits such as lower monthly payments, lower maintenance costs and the option to get a new vehicle every few years. But what happens if the lessee stops paying on a leased vehicle? Can it get repossessed just like owned cars? 

The short answer: Yes. If a person is currently leasing a car and can’t afford the payments, it can be repossessed. Let’s explore more about repossessing leased cars. 

What Happens When the Lessee Stops Making Lease Payments?

When a person leases a vehicle, they’re making an agreement with the lessor (or the company they’re leasing the car from) to make their payments on time. If they don’t, it’s a breach of the lease, and it will trigger the lessor to send a tow truck to come and get the car. It doesn’t take much for this to happen. Usually, just a couple of missed payments can get the vehicle taken away. 

Now, when a lessor takes the car away, is this the same as repossession? Yes, it is. If the lessee doesn’t authorize the option of having their car repossessed, it’s referred to as an “involuntary repossession.” If they do volunteer or authorize having the car repossessed, it’s called a “voluntary repossession.” 

Either way, it’s not a happy situation because it can cost a lot in fees such as: 

  • Early termination fees
  • Remainder of lease payments 
  • Past-due payments 
  • Excess wear-and-tear and mileage fees
  • Cost of repossession 
  • Cost of resale 

Is it Common for Cars to be in Repossession? 

Repossessed vehicles are not uncommon, especially in this day and age where the average new car costs roughly $47,000. If you face any type of hardship, it’s going to be very difficult to make these payments on time. According to recent data, roughly 2.2 million vehicles were repossessed in 2021. 

What Happens When Cars are Repossessed? 

When a repossession happens, the owner typically has the opportunity to make up the payments and take back the vehicle. If they’re unable to do so, the lender will take possession and sell the car, usually through an auction. This is beneficial for the public community because they can purchase repo cars for a fraction of the price. 

However, many auctions are not public and require a dealer’s license. RepoFinder does not. We are the largest bank repo list in America, with links to thousands of lenders selling bank-owned vehicles. Browse our selection of repo vehicles today, including previously owned and leased cars in good condition! 

SUV car

How Do I Buy a Car from RepoFinder?

If you’ve landed on our website, you’re probably shopping around for a car and looking for a great deal. We’re the place to make this happen! Our website offers a full list of banks and credit unions that are selling repossessed vehicles. (You can learn more about repossessions here). Even though the banks take these vehicles back, they don’t care to keep them. This is why they sell them to dealers or the general public. 

Many banks and credit unions choose to sell their repo inventory to dealers because they can get rid of many vehicles at once. Unfortunately, everyday people who are looking for a discounted vehicle aren’t able to access this inventory. But, you’re in luck! RepoFinder only sells to the public. This allows you to purchase repos directly from the source.

What are the Steps to Buying a Vehicle from RepoFinder? 

Whether you’re shopping for a car, truck, SUV or recreational vehicle, RepoFinder has it all. We even get small aircraft and boats! We’ll walk you through the process of buying a repossession so that you know what to expect. Please note that each bank and credit union has their own process for selling repos, so there may be some slight differences. 

View our list of repossessions

Start with our USA map and click on your state. This will pull up all of the banks and lenders that sell repo inventory. Because banks are always getting new vehicles, check back often if you don’t see something you like right away. Repo sales require patience! 

Make an offer 

When you find a vehicle that fits your needs and price range, you can make an offer. Most repos are priced by the bank based on the vehicle’s book value or recent appraisal. However, don’t be afraid to offer less. 

Sometimes you can see what other people are offering (open bid) and sometimes you can’t (closed bid). Open bids are more common because you can compete with others. You can give your offer verbally over the phone or by filling out an online form. 

Inspect the vehicle 

If your bid is accepted, it’s important to do your due diligence. Only work with sellers who are willing to let you inspect the vehicle. You may not be able to take it for a test drive, but you should be able to look at its condition. Remember, you don’t get protection with a repo, so it’s yours to keep once you drive it off the lot. 

Purchase the vehicle 

Once you’re comfortable with the purchase, you can proceed with the sale. The benefit to working with the banks is that you can get financing directly from them. In fact, banks are often willing to negotiate better pricing, terms and interest rates when you buy direct. And, you don’t have to deal with pushy salespeople working for commission. 

Hopefully you can see how easy it is to buy a car from RepoFinder. Remember these three things: be patient, do your homework and check back often. If you keep these things in mind, you should have no trouble finding a great vehicle at a fantastic price! 

Kelley Blue Book values

How Accurate is Kelley Blue Book?

If you’re considering buying a repossession, it’s a good idea to familiarize yourself with Kelley Blue Book (KBB) values. Given a history of over 90 years and millions of unique visitors logging onto the site each month, KBB is one of the most popular and trusted guides for automotive pricing. It can also be incredibly useful when placing a bid on a repo car. But, how reliable is KBB? 

Let’s go over the basics of how KBB determines used car values, some issues with pricing to think about and solutions when placing a bid on a repo car. 

How KBB Decides Used Car Values 

Kelley Blue Book regularly receives car prices from wholesale auctions, car dealers, rental fleets, auto manufacturers and private party sales. It uses a sophisticated algorithm to analyze pricing data, historical trends, current economic conditions, time of year, location and industry developments to come up with an accurate value for each vehicle.

Here are the different values each car is given. 

  • Private party value. This number tells you how much you can expect to pay for a vehicle through a private seller. 
  • Trade-in value. The trade-in value is the amount you’re likely to get when trading in your vehicle.
  • Suggested retail value. This is the price that car dealerships are usually asking for a vehicle.
  • Certified pre-owned value. Cars covered under certified pre-owned fall into this category.

As you can see, KBB takes many factors into consideration when determining the value of today’s vehicles. However, there is still a lag that must be accounted for, as it takes time to collect and analyze the data. It’s possible that the latest trends and economic conditions aren’t being accounted for in the latest number. Other than this, you can expect Kelley Blue Book to be a good benchmark for your bid. 

Tips for Bidding on a Repossession 

When you find a repossession that you want, the next steps are to inspect the vehicle and place a bid. Here are some tips that will help you place a strong bid.

  • Consider other sources. KBB is great, but there are other options as well. Check out the NADA Guide (the yellow book) and consumer reports. Compare your findings for the most accurate price. 
  • Negotiate. There is usually some room to negotiate when buying a repossession. Banks and lenders want these vehicles off their books and some will go below the KBB value. 
  • Set a limit. Know what you’re willing to pay for the vehicle. When multiple people bid on a repossession, it can drive up the price. Don’t let the excitement of winning a bid cause you to pay more for a car than you need to. 
  • Choose a bank or lender. Although you can bid through an online auction, it’s better to work with a lender or bank. You can get financing through this seller, which gives you more negotiating power and better terms. 

The Bottom Line

Kelley Blue Book is a great resource, but it’s not the only one out there. Be sure to consult other resources, establish a limit and do a thorough inspection. This way, you’ll be confident when it comes time to place a bid. To browse repossessed cars, trucks, RVs, boats, etc. in your area, visit RepoFinder.com. It’s FREE!