Repossessed Cars - What Should You Know?
A repossessed car is a car that someone has taken out a loan on to buy it and take it home. When, for whatever reason, the person falls behind on the monthly payments, the holder of the loan has the right to repossess the car. Often the holder of the loan is either a bank, the car lot where it was purchased, or a loan company.
Legally, the car does not belong to the buyer until the contract for payment has been settled in full. Once all payments on the loan for the car have been paid in full, the buyer is then the rightful owner of the car. Most lending agreements come with fine print. This fine print outlines the legal action they can take if the payments are late or aren't made.
Different states have their own car repossession laws, so when taking out a loan for a car, make sure that you know the laws in your state, and that you read the fine print on the contract you sign before you drive away with your new car. This could save you a lot of hassle later. The best way to avoid the threat of repossession, of course, is to make sure you have a safety net in place should you lose your job and have a hard time making your car payments.
Creditors have the right to sell repossessed cars at auction in order to recoup some of their car's value. It's common for new repos to sell for 2/3 of their value. This can work to your advantage if you are looking to buy a car at a lower price. Just remember, as with any car buying situation, you need to know what you are buying before you lay the money down. If necessary, bring someone with you who knows about vehicles and what shape they are in.
It is commonly thought that the previous owners of repos probably weren't keeping up to date on general maintenance of the car before the car was repossessed. This is given the fact that they couldn't afford to make the payments, so they probably weren't doing upkeep either. This is something to keep in mind before you rush out to save money by buying a repo.
As with buying a car from any car dealer, you need to do your due diligence. Know what you are buying and what's its value is on the market. Read contracts before you sign them and make sure you fully understand the agreements you are making. Take the time to visit the cars for auction before you bid on them so that you can look under the hood and get as much information and background on the vehicle as possible.
Buying a repossessed car can save you money if you know what you are buying. Check your state's laws on repossessed cars and where to find repo car auctions.
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