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October 12, 2019
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Learn how repossessed cars for sale could save you thousands
Repossession cars for sale offer some of the greatest steals in the car-selling industry. These cars are usually in good condition; the previous owners were just unable to afford them. Repossessed vehicles are sold at financial institutions, auto brokerages, auctions and a variety of other venues. You could win a quality vehicle at a significantly reduced price, but what exactly does buying a repossessed car entail?
Someone who fails to make car payments may have his or her car taken away. This is called car repossession. Oftentimes, a creditor will reclaim the vehicle without warning. However, there are laws regarding breaching of the peace. Using or threatening to use physical force to regain a car is considered a breach of peace, which may entitle the person to claims in a deficiency lawsuit. Each state has its own laws regarding the repossession process, but a security interest usually implies that a car can be taken away without notice if the owner defaults on the loan. The most common reasons for this are late payments and a lack of car insurance. The worst part? Repossession can cause some serious damage to a person’s credit history report.
A lender will either keep the car or try to sell it, usually at an auction. Each state has its own laws regarding sale procedures, but the lender will sell the car in a commercially reasonable manner. The lender will follow standard practices and might not obtain the highest price. If the sale was not commercially reasonable, there might be a claim for damages or a defense against deficiency.
If selling the car isn’t enough to pay off the balance of the car’s loan, the previous owner is still obligated to pay it off. The lender may even sue the car’s previous owner to gain the deficiency balance. In other words, having the car repossessed does not mean the owner gets away without paying. The most common defenses against having a car taken away involve the lender breaching the peace, the lender selling the car in a non-commercially reasonable manner or the lender losing the right to sue by allowing the “statute of limitations” to run out.
The value of a new car significantly decreases as soon as it’s taken off the showroom floor. A repossessed car’s value will decrease much more slowly. If the car is kept in good condition, you would eventually be able to sell it at a price close to what you bought it for. If you can find a relatively new repossessed car, the factory warranty might still be available.
The greatest downfall of buying a repossessed car is that you might be unable to find the car’s history. You might not even know where the car was before it was purchased. Since this idea turns away many consumers, you could save hundreds to thousands of dollars on a vehicle that’s in great condition. There will be less competition, leading to a decrease in demand and an increase in supply, thus driving down the car’s price.
The chance of winning a good-quality vehicle at a low price is very high. Banks and other financial institutions that sell these cars just want to recover their money; they’re not looking to make a huge profit. To determine a realistic price for the model you want, look on multiple auction websites and look at its Blue Book price.
Car auctions normally provide cars on a “where is, as is” basis. Inspect the vehicle well before the auction. Although it might appear shiny and like-new, there could be internal damage. If it’s possible to visit the car, turn it on and listen for any strange noises. Check the electronics, oil and the transmission fluid. When you feel that the vehicle is properly inspected, you will have more confidence that this is a good-running used vehicle. If you win the vehicle, there won’t be any big surprises regarding repair costs.
If you’re attending a well-known auction, you may be in a competition against auto experts and experienced car dealers, but don’t let this scare you. If you have researched the market values, inspected the cars and checked out car-history reports, you are just as ready to bid as anyone else. The biggest mistake amateurs make is overbidding. Check your finances and set a budget well before the auction begins. Don’t allow the excitement of bidding distract you from your budget. If you can’t afford the going rate, remember that there will always be another auction. Stay in control.
How can I avoid the repossession of my car?
Paying your loan payments on time is the best thing a car owner can do to avoid this situation. If you are worried about being unable to make loan payments on time, talk to your lender. The lender may be willing to reduce your payment amount and change your interest rate. If not, you may need to figure out a plan for additional income if you wish to keep the car. It’s better to voluntarily agree that your car should be repossessed than to wake up and realize you no longer have a car. However, you will still remain responsible for paying the deficiency balance on your credit or lease contract, and your lessor may still enter the repossession on your credit history report.