What is the duration of car on your credit report? A car repossession credit report is when a lender who owns the vehicle takes it back from you, if you’ve fallen behind on your car loan repayments. That is when people usually try to know how long it takes for a voluntary repo stay on their credit.
It is clearly true that car repossession will affect your repossession on your credit report which has terrible consequences on your credit score and affects your future chances of credit ability.
Using a car loan may seem like the best way to own your dream car, but the risk of getting your car repossessed appears in the background like a black cloud.
It’s important to remember that when you have a car loan, the lender actually owns the car until you fully pay off the loan. You can enjoy driving the car while making monthly payments, but failing to pay on time could result in repossession by the lender.
What is A Car Repossession?
A car repossession is when a lender who owns the vehicle takes it back from you, if you’ve fallen behind on your car loan repayments. In many states, your lender can repossess your vehicle if you miss a payment without warning.
But some state laws require that the lender sends a notice before repossessing your car. This notice should include missed payment details and provide a deadline for catching up on your loan payments before the lender finally takes your vehicle.
If your car gets repossessed, it will affect your credit score severely and getting another loan will prove challenging. This is because repossession means that you technically defaulted on your car loan and triggered several financial red flags that would harm your creditability.
Types Of Repossession on Your Credit Report
There are two types of vehicle repossession which are voluntary and involuntary.
1. Involuntary repossession:
This means the lender seizes your vehicle because you are behind on your car payments. You won’t know when this will happen, and actual repossession takes place occasionally. However, expect to pay heavy fees if this happens. Th is will have a negative influence on your account. There is an article on How a Poor Credit Score can Hurt your Social Security Benefits. Review it for more details.
2. Voluntary repossession:
When you voluntarily inform your lender that you can no longer afford to pay your car loan and agree to return the vehicle to them, it is consider a beneficial repossession.
In this situation, you have the ability to handle the matter according to your own taste. It also an advantage that you won’t have to pay heavy fees associated with an involuntary repossession.
How A Car Repossession Works
A car usually gets repossessed once you’re 90 days behind on payments. Lenders do not need a court order to start the repossession process. They can shift into gear once you miss a single payment.
The lender will inform you that they consider you as having defaulted on the loan but won’t state when and how the repossession happens.
Lenders often work with specific third-party agencies for vehicle repossession. These companies are have skills at their job, and they can take your car from various locations, such as your home’s street or your workplace parking lot.
What is the Duration of Car Repo On Your Credit Report?
Repossession stays on your credit report for seven years (7yrs), but you can still strengthen your credit even with the repossession on your credit score. You can achieve this by paying off outstanding debts on your car loan, paying off credit card bills, and avoiding adding credit card debt.
If you default on your car loan payment and are in danger of car repossession, immediately contact a non-profit credit counselor if you’re concerned that repossession may happen or is already in process.
How To Get A Repossessed Car Back
Now let’s talk about how to get your car back and how to remove a paid repossession from your credit? In certain states, if your car is repossess you will have the option to “restore” your loan by paying the past due amount and the repossession expenses charge by the lender.
This payment clears your loan balance, allowing you to retrieve your car and bring your loan payments up to date. However, the repossession will still remain on your credit report.
On the other hand, some states permit you to repurchase the vehicle by paying off the entire outstanding loan amount along with any additional fees. If this option isn’t achievable for you, you can wait for the lender to initiate an auction for the vehicle and then purchase it at that time. You can still apply for any of these Top 10 Credit Cards with No Annual Fee Debit or Service Charge.
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A repossession remains on your credit report for seven years, but you can still take steps to improve your credit despite its presence.
In some states, you may have the option to “reinstate” your loan after a car repossession by paying the past due amount and the lender’s repossession expenses.
This does not remove Repo from your credit report, it boost your credit score but allow you regain possession of your car. So if you are still asking how long does a voluntary repo stay on your credit, the answer is 7 years.