Repossession.
In plain English
A car loan is secured by the car, and in most states the lender can repossess after default without a court order, as long as they don't breach the peace. The part people don't expect: losing the car often doesn't end the debt. The lender sells it at auction, applies the proceeds, and can pursue you for the deficiency: the gap between what you owed (plus repo and auction costs) and what the sale brought. Repossession also marks the credit report for seven years.
01Why it matters
The deficiency balance is the second hit, and it's why calling the lender before default (hardship programs, voluntary surrender terms, refinancing) is almost always cheaper than waiting for the tow truck.
02The math, step by step
$14,000 owed; the car auctions for $8,000; repo and sale costs are $1,200. The deficiency is $7,200, owed in cash, on a car you no longer have. A voluntary surrender slightly reduces costs but produces the same basic math and a similar credit mark.
03What this is NOT
Voluntary surrender is not debt forgiveness, and hiding the car only adds fees while the interest runs. The debt is attached to you; the car was just the collateral.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
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