How to Reinstate a Car Loan After Repossession?

How to reinstate a car loan after repossession

Losing your car is heartbreaking, stressful, and expensive. Even worse, you still have to pay for your car loan. It must be challenging to lose your job or income after repossession.

Fortunately, there’s a solution! You may be eligible for reinstatement of your car loan. It will reduce the number of bills you owe and make it easier to meet your car finance commitments.

To find out more about reinstating your car loan, giving you a chance to fix things, and getting on the road again, read on.

What Is Reinstatement, and How Does It Work?

What is reinstatement and how does it work

Reinstating a loan indicates that the borrower brings the debt current by paying all past-due payments, late penalties, and all repossession expenses incurred by the lender. When the loan gets reinstated, the borrower returns the car and continues payments in the same manner as previously.

Your credit report will still show that you fell behind on payments as the borrower, but at least you get the automobile back. Making regular monthly payments will also help you to improve your credit.

Your auto loan agreement usually has a clause about your right to reinstatement. Borrowers who want to reinstate their loan after repossession should contact their lender immediately and get a written reinstatement quote. This quote will include the total cash required to bring the loan current and a deadline.

Borrowers should act quickly because most lenders are only required to honor a reinstatement quote for 10-15 days. Also, remember that the lender may allow you to work out a new payment plan while resuming your loan in some situations. Depending on your situation and the lender’s flexibility, this could mean lower payments or a more extended loan period.

Differentiating Redemption vs. Reinstatement

Differentiating redemption vs. reinstatement

If your vehicle has been repossessed, you can reclaim it by redeeming it from the lender (paying the entire amount owed) or reinstating car loans (getting current on payments). This blog post explains more about the redemption and reinstatement after vehicle repossession, their differences, and your eligibility.

Redeeming Your Car After Repossession

Most states grant you the right to redeem your car. That implies you can get the car back if you repay the loan. The amount you must pay to save the vehicle may include additional fees and expenses such as repossession, storage, and even attorney’s fees.

Shortly after repossession, the car loan lender must notify you of your entitlement to redeem the vehicle. The notification will indicate the amount required to redeem. If you have yet to receive this letter within five days of the repossession, contact the lender to find out how much you owe.

Redemption is available for a short period only. When the lender sells the car, your reprieve right expires.

What’s Your Right to Redemption?

Every jurisdiction provides a borrower with some form of redemption right. However, the nature of such rules may differ depending on the following factors:

  • How long must the lender retain the vehicle before selling it (usually 10-15 days after the lender notifies you of the repossession);
  • What type of sale must the lender conduct (mass vehicle auctions are common); and
  • How the lender must inform you of your right to redeem, when and how he will sell the car, and how much it will cost you to redeem it.

How Much Are the Car Repossession Fees?

How much are the car repossession fees

Repossession costs are often much higher than your initial car payment, running hundreds or even thousands.

Repossession costs frequently exceed the value of the vehicle itself. Here are some expenses that could be associated with taking back possession of your car:

  • Fees for towing and storage;
  • Fees for public auctions;
  • Costs for late payments;
  • Legal costs; and
  • Unpaid interest and outstanding principal balance.

You can still be liable for the remaining balance of your loan even after your car is sold at a public auction (at a state-determined fair price). It is referred to as a deficiency balance. Saving money on car insurance is a terrific way to balance your transportation budget.

Reinstating Your Car Loan After Repossession

Reinstating your car loan after repossession

You can reinstate the car if you need more money to pay out the loan to get the automobile back. You must make up all past-due payments, including any applicable fees and late charges, in a lump sum to restore the car loan.

What’s Your Right to Reinstatement?

Typically, there are two ways to do this correctly:

  • Your loan agreement may contain provisions for reinstatement.
  • The laws of your state may permit you to reinstate the loan even if your loan agreement does not grant you the right to do so. However, not all states grant the ability to reinstatement.

Additionally, certain national banks may not be governed by state legislation requiring reinstatement under federal banking law.

How Much Does It Take To Reinstate Your Car Loan?

Similar to redemption, lenders might be open to negotiating the reinstatement terms, such as how much of the outstanding debt or charges associated with the car’s repossession you’ll have to pay to get it back. They might also be open to changing the terms of the remaining payment schedule.

How Can a Lawyer Help You Get Your Car Back?

How can a lawyer help you get your car back

Our attorney at Fleysher Law can tell you if the lender’s actions were against the law and help you get your car back by raising any illegalities directly to the lender or filing a lawsuit in court.

At Fleysher Law, we understand this is incredibly stressful and painful. We will do everything we can to help you get through it. Contact us at (888) 716-0281 or schedule a free consultation.

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