In most states, you have to pay the entire car loan balance in order to get your car back after repossession. But you might have other options.
By Stephanie Lane, Attorney Case Western Reserve University School of Law
Updated 6/08/2021
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Whether you have to pay the entire balance of your car loan to get your car back after repossession depends on where you live and the terms of your car loan agreement.
- Redeeming the Car
- The Right to Reinstate the Loan
- Working Out Something With the Bank
- Bankruptcy to Get the Car Back
- Getting Help
Redeeming the Car
In most states, you have to pay off the entire loan to get your car back after repossession, called "redeeming" the car. The balance you would need to pay to redeem the vehicle might include extra fees and charges, including repossession and storage fees, and even attorneys' fees.
The Right to Reinstate the Loan
You might also have a right to reinstate the car loan. To reinstate the car loan, you bring the loan current by making up all of the past due payments, including applicable fees and late charges, in one lump sum.
Reinstatement could be an option for you if you can't pay the car loan off in full. You can reinstate the car loan only if your state's law allows it or if your loan agreement specifically states that you have this right.
Working Out Something With the Bank
If neither reinstatement nor redemption is an option for you, there's no harm in approaching the bank to negotiate a different resolution, such as a partial reinstatement and a new payment plan. The bank might even refinance the car loan if that's viable for you.
Bankruptcy to Get the Car Back
If the creditor isn't willing to work with you, then bankruptcy might be an option, depending on your financial circ*mstances. You might be able to get the car back if you file Chapter 7 bankruptcy or Chapter 13 bankruptcy.
However, filing for bankruptcy just to get a car back is rarely a good financial decision.
Getting Help
For more information about car repossession laws in your state, consult with a local debt relief attorney. If you want to learn more about filing for bankruptcy, talk to a bankruptcy lawyer.
