Buying and Keeping a Used Car

Buying and Keeping a Used Car
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Last updated: June 2011

What You Should Know and Do Before Buying A Used Car
Problems That May Arise During the Sale
Financing the Car
Auto Insurance
Co-signor and Guarantor Responsibility
Problems with the Car After Purchase
Repossession
Where to Get Help

Buying a Used Car: What You Should Know and Do Before Purchasing 

Buying a car is a big investment. This decision will affect your life for years. Buying a used car will generally cost you less than a new car, but there are more risks.

Before buying a used car, take some time to think about why you need a car.  Next, read about buying and keeping a used car below. Then, you can make an informed decision about buying a used car.

  • Do not buy a car on a whim or on the spur of the moment
  • Make sure you take your time to look over all the terms of your contract before you sign it
  • Don't let anyone pressure you into buying a car if you are not comfortable with the purchase
  • Buying a car without thinking it through will only be a headache for you and your family
  • Just remember that once you buy a car, you are responsible for it!

Where can I buy a used car? 

There are a lot of places that you can buy a used car.  Places you can buy a new car include: a new car dealership, a used car dealership, a private party, used car superstores such as CarMax, and rental car lots such as Enterprise or Hertz. You may want to visit several dealers. However, be sure to do some reading before you visit any dealers. 

You are generally better off buying a used car from a new car dealer rather than a used car dealer. Most new car dealers only keep the better cars that they take as trade-ins, they give better warranties than used car dealers, and they have better service facilities. The exception is used car superstores like CarMax—they usually sell decent used cars, offer warranties and have good service centers.

You can also find used cars in the newspaper or on the internet. Popular used car website include: Ebay Motors, Cars.com, AutoTrader.com, and Autobytel.com. You can also read the advertisements in newspapers or visit several dealers.

You may find a bargain by carefully checking on advertisements or notices placed by people in newspapers, at the supermarket, or at work.

What kind of research should I do before buying a car? How can I find more information on cars? 

Before you go to buy a car, do a lot of research about cars that you are interested in buying. The more informed you are about the car, the less likely a dealer can take advantage of you. Have the information with you so you can make the right decision on a car without getting pressured by a seller to buy the wrong car.

Before you start to research cars, ask yourself some questions:

  • Which cars do I like best?
  • What are the different options that are available?
  • What is a fair price for the car?  Can I afford it?
  • What safety features does the car have?
  • Is the car right for my lifestyle?
  • What is the car’s history of maintenance, problems, and accidents?
  • What are the pros and cons of a particular make and model of car?

There are many different ways you can research cars:

Talk to other individuals who have purchased a used car.

Look in publications like the Consumer Reports magazine that provide basic price figures and repair records for various car models. Every year the April issue of Consumer Reports features articles on used cars. The reports include fair prices and repair records many reports of most used cars. Your local library will have copies of Consumer Reports.

You should also consult the Car Book. The Car Book provides information on safety, reliability, fuel economy and other important features.

You should look at the Blue Book to determine the fair market value of the car. You can get a copy of the Blue Book at a bookstore, at the library, or the Kelly Blue Book website.

Look on the Internet for sites that offer customer reviews and information about used cars. Some sites you can visit are: MSN Autos, Cars.com and Edmunds.com.

How should I "test" the seller to make sure I’m getting a good deal?

Prior to test-driving the actual car, do a test drive on the seller over the phone. You should do this for two reasons:

  • To find out as much as possible about a car before you go and see it, and
  • To get a sense of the seller, so you do not make the mistake of buying the wrong car or a bad car

This interview can give you information on the car before you see it and it can help you rule out certain dealers and sellers. Call the dealer or seller and ask questions like the following:

  • Why are you selling the car?  (If it's a private seller)
  • How many miles are on the odometer?
  • What is the condition of the car?
  • What special features does it have?
  • How many people have owned the car?     
  • Has the car ever been in an accident?
  • Can I see the service records for the car?
  • How much are you asking for the car?

If the person selling the car is a private seller, try to get a sense of the seller, and why they want to sell the car. Ask to see the car's service records. 

Tip: Check to see if the odometer reading on the car is the same reading that the seller told you; if not, that is a warning sign that s/he is not telling you the whole story. 

How do I make sure a car is in good condition?

You will not be able to tell the condition of a car just by looking at it. You need to test-drive it and have it inspected by a mechanic. A reputable dealer or an honest private seller will not object to you having a mechanic to inspect the car. 

There are Automobile Inspection Service companies that will inspect the car for you. You can find companies in the telephone yellow pages by looking under "Automobile Inspection" or "Automobile Diagnostics Service."

These companies will check the major systems of the car (engine, brakes, drive train, etc.) and write you a report on their findings. The inspection might cost you $50 to $100. However, you will likely save you more money in the long run. You can also ask a friend that is auto mechanic or another reputable mechanic. 

Another way to inspect a car that you are interested in is to get its vehicle identification number (VIN) and visit Carfax on the net. At the Carfax website you can get a vehicle history report about the car for about $15. This report will show if the vehicle has been involved in a serious accident or other disasters like a flood.

What financial issues should I think about when buying a car?

There are two ways to pay for your car:

  • You can pay the entire amount of the car in full, or
  • You can finance it over time. Financing it means you will make monthly payments until the car is paid in full

If you finance the car, the total cost of the car increases, because you are also paying for the cost of credit.

You have to consider how much money you can afford to pay as a down payment and as monthly payments. You should never sign a contract that calls for you to pay monthly installment payments that exceed your budget. If you fail to make monthly payments, the car might get repossessed.

If you finance the car, the two most important numbers are the finance charge and the annual percentage rate (APR). The finance charge tells you in dollars how much you are paying for credit. The APR tells you the interest rate of the loan. It is a fee that is charged by the lender to the borrower for the use of the borrowed money. Check out APRs among different dealers to compare credit rates. If one dealer is charging 9% APR and another is charging 14% APR, you will save some money by buying the car at the lower APR. 

Be cautious of advertisements that offer financing to people with bad credit. These are usually a warning sign of problem-dealers and might end up costing you a lot of money.

Should I pay the price the dealer first asks?

No! Almost all used car dealers expect you to bargain about the price. Dealers may be willing to drop their prices between 10 and 20 percent, sometimes more.

  • Shop around to get the best possible price by comparing models and prices in ads and at dealerships
  • Check publications at a library, bookstore, or Internet that discuss used car prices
  • Tell the dealer you want to know the "best price" he can give you on the car so that you can compare it to others you are looking at
  • Never tell the dealer the price another car dealer has given you
  • Leave any dealership that does not give you a fair price, that treats you rudely, or that puts pressure on you to sign a contract before you are sure

What should I know about warranties?

A warranty is usually a written promise that the dealer will fix the car for a certain period of time, like 30 days or 60 days. Some dealers charge for a warranty. It is better to have a written warranty than not to have one. You should always ask about the warranty on the car. 

Ask the dealer questions like:

  • How long is it? 
  • What does it cover?
  • What is not covered?

If the contract says the car is being sold “As Is” this means there is no warranty.

Be careful of some warranties, like so-called "50-50" warranties, where the dealer agrees to pay 50% of parts and labor charges should the car break down in the first 30 days. Sometimes the dealer just charges twice the normal cost of repair so the 50-50 warranty ends up with the buyer actually paying 100% of the repair costs! 

The law sometimes gives you an "implied warranty." That's a warranty that your car should work for a reasonable period of time. An implied warranty exists in any car sale unless the seller sells the car "as is" or if the contract clearly states there are no implied warranties. 

The safest rule to follow on warranties is: Get it in Writing. If you don' get it in writing and the dealer refuses to honor their promise of a warranty, there probably will not be much you can do about it.

Take the time to read your warranty carefully before you sign the contract.

If a vehicle has a limited warranty, make sure to get the dealer to put all the terms of the warranty in writing. Make sure the written warranty states everything that is covered as well as how long the warranty lasts.

What is a service contract?

  • A service contract is an agreement that the dealer might try to sell to a used car buyer
  • This agreement says that a service contract company, not the dealer, will fix the car for a set period of time for specified problems
  • The dealer will charge the buyer for the service agreement and the buyer will have to get the car fixed at a place set out in the agreement, usually at the dealership
  • Think twice before you buy a service contract!
  • Service contracts are usually expensive and only cover problems with major items
  • It is often difficult to get the service contract company to honor the agreement

What should I do if I want to trade in my car when I buy my used car?

If you want to trade in your old car:

  • Research the value of the car so you know what a fair price should be
  • Bring a copy of the title with you when you visit the dealer
  • Discuss the possibility of a trade-in with the dealer only after you’ve negotiated the best possible price for the car you are buying
  • Tell the dealer you might want to trade in your car
  • If the dealer offers you too little on your old car you can put an ad in the newspaper and sell it yourself

MYTH 1: I have a ‘Three-Day Right to Cancel’ a used car purchase. Not true! The Three-Day Right to Cancel law does not apply to the sale of automobiles

If you sign a contract to buy a car, you cannot return the car after three days

MYTH 2: The ‘Lemon Law’ will help me if my used car needs repairs after purchase. Not true! The Lemon Law is a law that protects consumers who buy new cars that turn out to have constant problems and require them to be in the repair shop more often than it can be driven. Used cars are not covered by the Lemon Law.

MYTH 3: All cars come with a warranty. Not true! Many used cars are sold without any warranties. If the contract you signed says the car is sold "As Is" or if the contract states that there are no warranties made, you are on your own if the car breaks down. If you want a warranty, you should get one in writing.

Problems that May Arise During Sale

What do I do if the salesman pressures me to buy a car?

If a salesman tries to put pressure on you to buy, tell them that you are not going to make a decision that day.  Explain that you will have to check out other dealers before you decide which car to buy. Sometimes the salesperson will say the car might not be there tomorrow, but that's just to get you to buy it faster. If you are uncomfortable with the salesman, ask for another one. If they won't give you a different salesperson, leave! There are lots of other dealers out there.

What if a dealer or salesman makes a promise about a car but doesn't keep the promise?

Dealers and the salespeople who work for them want to sell cars so much that they sometimes go too far.

  • They might make a promise about a car and don't honor it
  • Sometimes they say something about a car that turns out not to be true
  • The dealer may not tell you things about the car that you should know
  • Lawyers call this kind of conduct  "misrepresentation"
  • If the misrepresentation is "material" (information that you need in the car purchase), you could sue the dealer who made the misrepresentation
  • For example, if the salesman says that the car has a six-cylinder engine but it turns out the car has a four-cylinder engine, the buyer could sue the dealer for the misrepresentation

What kinds of false promises might a dealer make?

  • A dealer should not tell you that the car has been repaired when in fact no repairs were done
  • A dealer should not tell you that you are protected by a warranty if the car is sold to you "As Is," which means there is no warranty
  • Another type of deception is "bait and switch"
  • In "bait and switch" the dealer advertises a car but does not actually intend to sell you that car
  • For example, an ad may describe a car with certain luxury features and a bargain price, but when you go to see the car, the dealer falsely tells you that the car in the ad was sold and steers you to another car.

How do I protect myself from a dealer who makes false promises?

It is difficult to prove in court that a dealer made a verbal promise to you. If the dealer makes a promise that is important to you, have them put it in writing in the contract. If the dealer refuses to put the promise in writing, you need to decide if you want to walk away from the deal. If you have the promise in the written contract, you can take the dealer to court if the dealer doesn't keep the promise. 

Where can I go for help if the dealer doesn't keep his promises?
 

Go to the section on Where to Get Help.

Financing the Car 

How do I get financing for the car?

Usually, the dealer offers to obtain financing for you. You don't have to use the finance company that the dealer recommends. You may be able to find a better deal than the financing arranged by the dealer.

You have a right to contact other lenders. Compare the financing that other lenders offer you with the financing the dealer offers you. Because offers vary, shop around for the best deal:

  • Compare the APR (interest rate)
  • Paying the dealer 9% APR might mean you could have saved money if you had called the bank six blocks from your home that offered 7% APR
  • Compare the length of the loan 
  • Find out how much the monthly payments will be

You should shop at several dealers to see who will give you the lowest APR. Check the current interest rates for used car loans at banks, credit unions, or lending referral outfits like LendingTree on the internet.

What does it cost to finance a car?

When you buy a car on credit, the lender must give you information about the cost of financing the car. You have a right to receive this information in writing before you sign the contract to finance the car.

One of the items listed on the form tells you how much you will pay for credit. That number is the finance charge. Another item is the annual percentage rate (APR). The APR is a yearly interest rate. It's a good idea to compare the APR rates that different lenders offer. Also, check the length of the loan (the number of installment payments) offered by each lender. If the loan is for a longer time period, the monthly payment will be lower. But the longer the loan, the more total interest you will have to pay.

Will my car payment be the same every month?

Not necessarily. The contract must tell you the amount of each of your payments, the number of payments, and when payments are due.

For most contracts, you make a payment of the same amount each month and a final payment of about the same amount. But some contracts make you pay a regular monthly payment and then a much larger amount, a "balloon payment," for your last payment.

Watch out for large balloon payments. Illinois law allows auto sales contracts to use a balloon payment, so long as you are told about it in the contract.

If you have a contract with a balloon payment, the contract must give you three options when the balloon payment is due:

  • First, you may pay off the balance you owe
  • Second, you may refinance the balance on terms like those when you signed the contract
  • Third, you may return the car to the seller

Should I sign a contract that has a balloon payment?

At first glance, a contract requiring a balloon payment may seem inviting. The amount of the monthly payment you make before the balloon payment is due will probably be lower than the payment in a standard contract. Before you sign a contract requiring a balloon payment, read the contract carefully and think about what may happen when the last payment comes due.

If you cannot pay the full amount of the balloon payment and cannot afford the payments required to refinance the balance, you could lose the car.

Do I get my down payment back if my credit application is rejected?

If you sign a contract with a dealer to buy a car, the contract may give the seller the right to cancel the deal if your credit application is rejected. If that happens, the dealer must return to you all of your down-payment and the car you traded-in. 

The dealer can’t charge you anything if you cooperated when the credit companies rejected your application to finance the car. Many dealers will try to keep your down payment or otherwise charge you when the credit application is rejected. See the bottom of this article to find out where you can get help if this happens.

What can I do if I have bad credit and can’t get financed?

When you apply for credit, the lender will obtain a copy of your credit report. If the lender rejects your application because of problems shown on your report, the first step to take is to find out if your credit report is accurate.

You may obtain your credit report from a credit bureau. The three major nationwide consumer reporting companies are Equifax, Experian, and Trans Union. You have a right to a free credit report every year from each of the major agencies and can receive these reports through Annual Credit Reporting Request Services. Do not contact the companies individually because the free reports are only available through the Annual Credit Reporting Request Services.

If you find an error in the report, you have the right to notify the credit bureau that you dispute the information, and to request an investigation. The credit bureau has 30 days to investigate and, if an error is found, they must correct the error. To contact a credit bureau, call: Equifax (800) 685-1111; Experian (888) 397-3742; Trans Union (800) 916-8800.

What if I don’t like the decision of the credit bureau?

If you are not satisfied with the outcome of the investigation of the credit bureau, you have the right to send a statement (100 words or less) to the credit bureau explaining your side of the story. The credit bureau must include your statement in your credit report. That statement will be sent to creditors that request your report. 

Can I remove information on my credit report that I don’t like?

No. If the information in your report is correct, you cannot have that information removed. Negative information usually can stay in your report for up to seven years. You may be able to get credit even if you have blemishes on your report, though. Some creditors may pay more attention to your recent payment history than to past problems.

To get more information about credit reports, check the Federal Trade Commission publication, "Building a Better Credit Report," by calling 1-877-FTC-HELP or by seeing the Federal Trade Commission Facts for Consumers on their website.

MYTH 1: The car dealer can give me the best financing deal. Not true! Sometimes, the dealer will have the lowest finance rates. Sometimes, you will find lower finance rates at a bank or credit union or elsewhere.

MYTH 2:  If my credit application gets turned down, I cannot get my down payment back from the dealer. Not true! Illinois law allows car buyers to get their down payments, and trade-ins, back from the dealer when the credit application is rejected.

MYTH 3: All 48 of my car payments have to be about the same amount. Not true! Dealers can require a balloon payment, a final payment that is much larger than the other payments. Example: A contract could require you to pay 47 monthly payments of $200 and a final payment of $2000.

Auto Insurance

What about insurance on my car?

Required insurance in Illinois:

  • You are required to have car insurance to cover injuries to other people and their cars, in case you get in an accident. This is called "liability" coverage. 

Optional insurance:

  • It isn't required that you buy insurance to cover damage to your vehicle in an accident, but it's a good idea to get this type of insurance, called "collision" coverage
  • "Comprehensive" coverage covers theft and fire damage to your car 

 

Make sure you buy a level of coverage that covers your needs.  Remember that the state minimum levels may not be the best coverage for you.

For example, if you are a parent with three children, the state minimum coverage probably is not the best option for you. However, if you are a 21 year old that has just graduated from college with no dependants and few assets, the state minimum may be sufficient for you.

Generally, the more expensive the car, the higher your insurance payments. Trendy cars, like two-door sports cars, tend to be more expensive to insure than four-door sedans. If you have a car alarm, your premium may go down. If you park your car in a private garage, your insurance costs will be less than if you park in a public parking garage or on the street. Females tend to pay less for insurance than males.  Also, if you are under the age of 25, your insurance will be higher than people who are older than 25. Married individuals may pay less for car insurance than single individuals. The different categories of insurance are as follows:

Coverage

What is covered? 

Required?

Liability Medical, rehabilitation, funeral bills, pain and suffering, legal costs for you and your passengers, and replacement of other person's car Yes
Uninsured/Underinsured Motorist Medical, rehabilitation, and funeral bills for you and your passengers from an accident by a motorist with no or insufficient insurance Yes
Collision and Comprehensive Repair or replacement of your car in case of an accident or if it is stolen Yes, if you have leased or financed your car
Personal Injury/medical Lost wages, medical bills for you and your passengers Optional
Roadside Assistance Towing Optional
Rental Reimbursement Rental-car payment while your car is in the repair shop Optional

Shop around to find the lowest rate for the best coverage. If you look in the yellow pages under insurance, you can call a variety of different insurance companies and ask for a quote. You can also use the Internet to search for free insurance quotes from reputable insurance companies. Some sites you can visit are for InsWeb, Insurance.com and NetQuote. Major insurance companies may have useful websites such as those for AllstateProgressive, State Farm and Geico, etc. 

What is credit insurance?

A car dealer may also try to sell you credit insurance. Credit Life Insurance will pay off the contract if you die. Credit Accident and Health Insurance will pay off the contract if you become ill or are injured and unable to work.

Credit insurance might be a good idea for people who are over 50 years old and have dependents. This type of insurance is expensive for the coverage it provides.

You do not have to purchase credit insurance. Don't buy it unless you need it. For most people the money you would spend on credit insurance will go much further on a conventional term life or accident insurance policy. 

MYTH 1: I have liability insurance that is required by the State of Illinois so my car is covered if I am in an accident. Not true! Liability insurance required by the state only covers the other cars in an accident—not the driver’s car. "Collision" or "comprehensive" insurance covers the driver's auto.

MYTH 2: If you buy a used car you are required to buy credit insurance. Not true! Credit insurance—which is insurance not on the car but on the health or life of the car purchaser-- is purely voluntary. Don't buy it unless you think you need it.

Co-Signor and Guarantor Responsibility

Should I co-sign a contract or sign a contract as a “guarantor”?

Sometimes car buyers are required to provide a “cosigner” or “guarantor” when purchasing a car. This is usually the case if the buyer has bad credit or no credit history at all. Finance companies ask for the buyer to bring another person with income or good credit (parent, spouse, sister, friend) to sign the contract. If the buyer fails to make payments as required by the retail installment contract, the finance company can sue the buyer and may also be able to hold the co-signor liable. 

Think twice about co-signing a contract for someone else. You could be held responsible if the buyer doesn't make the payments.

When can I be held responsible for payments as a co-signor to an automobile purchase contract?

In addition to the buyer, a cosigner of a contract for the purchase of a car can be required to pay, but only if the person signed the contract as a cosigner and one of the following five conditions apply:

  • If you received the car
  • If you are the parent of the buyer
  • If you are the spouse of the buyer
  • If you sign as a "guarantor of collection" or
  • If you are listed as an owner on the title to the car

How do I know if I am a “guarantor” of the auto purchase contract?

Even if you are not a parent or spouse of the car buyer and have never had possession of the car, you still might be held responsible for the car payments if you signed as a "guarantor". You are considered a guarantor if you have signed the auto purchase contract and you signed a document entitled "Explanation of Guarantor's Obligation". By signing this document you are agreeing to pay the seller the balance of the contract if the buyer fails to make the payments.  

If I signed as a guarantor, can the seller sue me?

Yes. You can be sued as guarantor (or "cosigner") after the creditor has attempted to collect from the buyer. If the creditor has not received full payment from the buyer, he can then sue the guarantor. 

Problems with the Car After Purchase

Used cars sometimes break down after purchase, don’t they?

Yes, but this can happen to any car. When purchasing a used automobile, keep in mind that the previous owner may not have performed regular maintenance. The used car you are looking at might have serious mechanical problems. You might want to protect yourself by getting a written warranty when you buy your car.

What do you do if your car needs repair?
 

  • Find out if the car has a written warranty or service contract
  • The dealer or the seller should have  provided you with the written warranty or service contract when you bought the car or shortly after
  • Read over the terms and conditions of the warranty or service contract very carefully
  • What are the time limits? 
  • What is and is not covered? 
  • What do you have to do to use the warranty or service contract?
  • Follow the guidelines on how to use the warranty or service contract
  • It may require that you bring it to the dealer where you bought the car for repairs

What if the dealer does not want to repair the car?

First, find out why the dealer will not repair the car. Keep in mind that a dealer may not have to fix the car if they can show that the car owner caused the damage or failed to maintain the car. 

The dealer may also rely on the fact that there were no written warranties. However, if the dealer made promises about the condition of the car, those promises can sometimes be enforced. If the dealer made no promises, there may still be implied warranties.

It's important to write a certified letter to the dealer outlining when you bought the car, the car problems that require repair, when they began, and why you believe that the dealer must make the repairs.

Second, if you bought the car "As Is" the dealer does not have to repair your car. A dealer must disclose the fact that the car is sold "As Is" and that you as a buyer must pay for all repairs to the car. The dealer may still have made promises to you during the sale that might amount to a warranty. Consult an attorney to determine your rights.

Finally, if a dealer refuses to fix the car as required by either the service contract or warranty, there are other legal options that are available. You can sue the dealer for breach of contract, or other violations of law. You will probably need a lawyer to do this. See the end of this article for where to find a lawyer.

MYTH: A car buyer has an automatic right to cancel the contract if the car breaks down. Not true! A car buyer might be able cancel a contract if the car breaks—if she received a warranty or purchased a service contract--but only if the dealer refused to honor the warranty or the service agreement.

Repossession

What is repossession? 

Repossession takes place when the creditor (the business that lent you money or financed your car purchase) takes your car from you.

Repossession can happen if you miss even one payment or if you break any agreement in the contract you signed. Illinois law allows the creditor to repossess your car without giving you any notice beforehand.

What is a wrongful repossession?  

There are two types of wrongful repossessions.

The first type of wrongful repossession is a repossession that is not done in a peaceful manner:

  • If a repossessor (repo-man) breaks into your garage to repossess your car, that is a wrongful repossession
  • If a repo-man threatens you with physical violence, that is a wrongful repossession
  • But if your car is parked on your driveway or on the street in front of your house, the law allows the repo-man to take it. 

The second type of wrongful repossession is when a creditor repossesses your car even when you have not missed a payment or broken any agreement in the contract. 

How can I prevent repossession?

If you make all your car payments on time and follow all the other requirements of the contract you signed, the creditor cannot repossess your car. So it is important to make sure that you buy a car that has payments you can afford and then pay them on time. Car contracts usually require you to keep the car insured. If your contract requires insurance and you let the insurance lapse, the creditor can repossess your car. 

If you miss a payment, it is important to call the creditor and try to work out a payment plan. Sometimes the creditor will accept a partial payment or give you extra time to make a payment.

Do not send a partial payment unless you first get the okay of the creditor to do so. The bank or finance company does not have to accept a partial payment or a late payment.

Sometimes, if you have paid many payments on a contract but are now having trouble, you can ask to do a new contract with the creditor (a renewal or re-finance agreement) that will lower your monthly payment amounts. This will cost you extra finance charges in the long run.

Can I get my car back after repossession? 

It is possible to get your car back after repossession. If you paid more than 30% of the total sales price, you can get your car back by paying the creditor the past due payments, the repossession fees (usually $300 to $500), plus late charges. You only have 21 days to do this and you can only do this once. 

The second time the car is repossessed the creditor does not have to accept this money and return your car.

If you have not paid 30% of the total sales price, the law says you have to pay the creditor the full amount due on the contract (plus repossession fees and late charges) to get your car back. This means you would have to pay all the past due payments and all the payments that are due in the future. You have until the creditor sells the car to pay these amounts and get it back. If you cannot come up with all this money, sometimes the creditor will accept less than the full contract amount. Ask the creditor if they will accept less than all payments to return your car. 

How do I get back my personal belongings out of my repossessed car?

You have the right to get back your personal belongings that were in your car when it was repossessed, like tools, cassette tapes and documents.

But the creditor does not have to return things like a new tire or a new CD player you installed in the car. You should contact the creditor and make arrangements to pick up your items.

Can bankruptcy help me get my car back after repossession? 

In some situations, you can get your car back, or even stop a repossession, through filing a Chapter 13 bankruptcy case. You would have to agree to begin making payments again and eventually pay off the entire amount owed.  However, in some cases you might only have to pay the actual value of the car plus interest. You should see a bankruptcy lawyer to discuss this possibility.

What steps does the creditor have to take after repossessing my car?

The creditor has to send two notices to you after the repossession.

The first notice will tell you how much it will cost you to get your car back. Remember that the creditor might accept less than the notice says. This first notice will also tell you when the car will be sold if you cannot work out a deal to get it back.

The second notice the creditor has to send will tell you that the creditor is going to ask the Secretary of State to issue a new title to your car in the creditor’s name. This notice will explain that you can stop the transfer of title to the creditor by filling out a form that will be enclosed. That form is called the "affidavit of defense". You can only fill out this form if you have a defense to the repossession.

A defense means a reason why the creditor should not have repossessed the car. For example, if you were not behind in your payments, that could be a defense.

If you fill out the affidavit of defense form and send it to the creditor by certified mail, then the creditor cannot get a new title from the Secretary of State. The creditor would then have to file a lawsuit to get the title switched to its name. If such a lawsuit gets filed you should see a lawyer immediately. The lesson here is this: If you want to try to get the car back and if you have a defense, completing the affidavit of defense form and sending it to the creditor will give you extra time and may help you to get the car back. You may want to talk to a lawyer about this.

What happens if the creditor will not return my car? 

After sending you the notices talked about above, the creditor can go ahead and sell your car. If you cannot work out a deal to get the car back or if you do not send the affidavit of defense. Usually the creditor sells your car to a used car dealer at a dealers-only auto auction. It is likely that your car will be sold at a low price.

The creditor will then want to collect from you the difference between the amount you owed on the car at the time of repossession and the amount it gets sold for. For example, if you owed $7000 on the car when it was repossessed, and the creditor then sold it for $3000, the creditor will tell you that you must pay a $4000 "deficiency." If you do not pay the $4000, the creditor could file a lawsuit against you to collect the deficiency.

What happens if the creditor sues me after the repossession?

If the creditor sues you after the repossession, you should see a lawyer as soon as possible. Your lawyer might be able to win your case, or reduce the amount owed, because the law requires the creditor to take many steps in selling the repossessed car. If the creditor does not take these steps, or fails to send you the right notices, sometimes he cannot get any money from you in the lawsuit.

MYTH 1: I missed only one payment so the creditor cannot repossess my car. Not true! Most contracts allow repossession if even one payment is late.

MYTH 2: I am only a few days late on my payment, so my car can’t be repossessed. Not true! A car can be repossessed if you are even one day late on a payment! Most creditors will not repossess your car if you are just a few days late in making your payment--but they could do so if they choose. If you are going to be late with a payment, call the creditor and inform them in advance.

MYTH 3: If I pay something, they can’t repossess my car. Not true! A creditor can repossess your car if you are behind on any payment, even if you paid something toward the payment.

MYTH 4: Once my car is repossessed, I will not have to pay any more money on it. Not true! The creditor will sell the repossessed car and sue you for the difference between how much you owed on the car and the amount the creditor sold the car for. For example, if you owed $7000 on the car when it was repossessed, and if it is sold by the creditor for $3000, the creditor will tell you that you must pay this $4000 "deficiency". If you do not pay the $4000, the creditor could file a lawsuit against you to collect this amount.

MYTH 5: If I return my car to the creditor, it will not show up as a negative matter on my credit record. Not true! When you return your car to the creditor it will be listed on your credit record as a "voluntary repossession" and counted against you.

MYTH 6: The repo-men cannot come on my property to repossess my car. Not true! As long as they act in a peaceful manner, a repo-man can come on your property to repossess your car. They can tow your car away from your driveway, but they can't break into a locked garage or tear down a fence.

Where to Get Help

Enter your zip code in the "Helpful Organizations" section below to find an organization that can help you  in your area. 

In addition, you can try the Illinois Attorney General, Consumer Protection Division, or call toll-free: (800) 386-5438; Spanish: (866) 310-8398; TTY:(800) 964-3013.

There are many consumer websites that offer advice in car purchasing.

Helpful Organizations
The following organizations may be able to help you with

For a list of organizations in your area that may be able to help you, enter your zip code.

       

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