Exeter Finance, known for specializing in auto loans for people with varying credit profiles, helps countless individuals purchase a car even if their credit history is not perfect. However, like any auto loan provider, there is always the possibility of repossession if a payment is missed or if the borrower defaults on their loan. Repossessing can be a confusing and stressful experience, so understanding when and why Exeter Finance can repossess your car is essential for those who have financed a vehicle through the company.
In this detailed guide, we’ll describe the circumstances under which Exeter Finance can repossess a vehicle, the process involved, and the steps you can take to prevent repossession. Additionally, we’ll explore the impact of repossession on your credit and discuss the legal implications of the process.
Table of Contents
What is Vehicle Repossession?
Before getting into the specifics of Exeter Finance’s policies, it is important to understand the general concept of repossession. In simple terms, repossession is a legal process by which a lender repossess an asset, such as a car, when the borrower fails to meet his loan obligations. In the case of Exeter Finance, this means that if a borrower misses a payment or breaches the loan contract, Exeter can take action to repossess the vehicle to recover its losses.
Repossession typically occurs when a borrower misses several payments and takes no steps to resolve the delinquency. The lender will often work with a third-party repossession agency to repossess the vehicle. Once repossessed, the lender can sell the car to recover the outstanding amount on the loan.
Repossession is a last resort for lenders because it can be costly, time consuming, and damaging to the relationship with the borrower. However, if the borrower fails to make payments and does not communicate with the lender, repossession may become the only viable option for the lender to recover the loan.
How Does Repossession Work?
When a borrower takes out a loan to finance a vehicle, they enter into a contract with the lender (in this case, Exeter Finance). This contract outlines the terms of the loan, including the payment schedule, interest rates, and obligations of the borrower. If the borrower fails to keep his end of the contract – usually due to non-payment – the lender has the right to repossess the vehicle.
The repossession process generally follows these steps:
- Missed Payments: The process begins when the borrower misses one or more payments. Like most lenders, Exeter Finance will not repossess the vehicle after even one missed payment. However, missing several payments – usually two or three – may trigger the repossession process. It is important to note that Exeter Finance will reach out to the borrower during this time to remind them of their payment obligations and offer possible solutions.
- Communication from the Lender: Before repossessing a vehicle, a lender like Exeter Finance will typically send a notice to the borrower informing them of the missed payments and the risk of repossession. These notices are an opportunity for the borrower to take corrective action, such as making payment or contacting Exeter to discuss alternative payment arrangements.
- Repossession Order: If the borrower fails to respond to the lender’s communications and continues to miss payments, Exeter Finance may issue a repossession order. This order is sent to a third-party repossession agency, which is responsible for locating and retrieving the vehicle. The timeframe for this step can vary depending on state laws and the terms of the loan agreement, but it typically occurs when the borrower is 60 to 90 days behind on payments.
- Vehicle Retrieval: The capture agency will then attempt to locate and recover the vehicle. This can happen at any time and at any place where the car is found, as long as the repossession agents do not disturb the peace (for example, by forcibly entering the garage or threatening the borrower).
- Post-Repossession: After getting the vehicle back, Exeter Finance will usually sell the car at auction to recover the loan balance. If the sale price does not cover the full amount owed, the borrower may still be responsible for paying the difference (known as the “deficiency balance”). This remaining debt, along with repossession, can have a permanent impact on the borrower’s credit score.
When Does Exeter Finance Repossess a Vehicle?
While the repossession process generally follows a similar pattern for most lenders, the timing and specific circumstances under which Exeter Finance repossess a vehicle can vary depending on a number of factors. These factors include the borrower’s payment history, communication with Exeter, and state laws governing repossession.
Below are some of the key factors that influence whether Exeter Finance can repossess a vehicle:
- Missed Payments: As mentioned earlier, the repossession process typically begins when the borrower misses several payments. Although Exeter Finance may not take action after a single missed payment, failing to make payments for two or more consecutive months may trigger the repossession process.
- Loan Default: In some cases, a borrower may be considered in default even if they have not missed many payments. Default may occur if the borrower violates other terms of the loan agreement, such as failing to maintain insurance coverage on the vehicle. When a borrower defaults on his loan, Exeter Finance may have the right to repossess the vehicle without waiting for multiple missed payments.
- Delinquency: Delinquency refers to the period of time a borrower is behind in his loan payments. Like many lenders, Exeter Finance has a grace period before it considers a borrower delinquent. Once the borrower enters default status (usually 30 to 90 days after nonpayment), Exeter can begin the repossession process. The exact time frame for this depends on the terms of the loan and state regulations.
- Communication: Borrowers who are proactive in communicating with Exeter Finance about their financial difficulties may have a better chance of avoiding repossession. Lenders are often willing to work with borrowers who attempt to resolve their payment issues, such as by offering payment deferrals or loan modifications. On the other hand, failing to communicate with the lender may increase the chances of repossession.
How to Prevent Repossession
If you are facing financial difficulties and are concerned about repossession, there are some steps you can take to prevent it. By acting quickly and maintaining communication with Exeter Finance, you can avoid the stress and financial consequences of repossessing your vehicle.
Here are some strategies to help prevent repossession:
1. Communicate with Exeter Finance
The most important step you can take to prevent repossession is to contact Exeter Finance as soon as you become aware that you may have trouble making payments. Lenders are often willing to work with borrowers who talk openly about their financial struggles. Contact Exeter’s customer service department and explain your situation. They may be able to offer a temporary solution, such as deferring payments or extending the loan term to lower your monthly payments.
2. Request a Loan Modification
If your financial difficulties are expected to last longer, you can request a loan modification. This involves adjusting the terms of your loan to make payments more affordable. For example, Exeter Finance may agree to extend the term of your loan while reducing your monthly payments. Keep in mind that this may result in paying more interest over the life of the loan, but it can be a helpful way to avoid repossession in the short term.
3. Refinance the Loan
Refinancing means replacing your current loan with a new loan to pay off the original loan, usually with different terms. This may be a good option if you qualify for a lower interest rate or more favorable loan terms than you initially received. By refinancing, you can lower your monthly payments and make it easier to stay current on your loan. However, refinancing may not be an option if your credit has deteriorated since you took out the original loan.
4. Set Up a Payment Plan
If you have missed payments and are at risk of repayment, Exeter Finance can allow you to set up a payment plan to catch up on your overdue payments. This usually involves making an initial payment to show your commitment to solving the problem, followed by smaller payments over a set period until you are caught up. This can help you avoid repossession and get your loan back on track.
5. Consider Voluntary Repossession
In some cases, borrowers who are unable to keep up with their loan payments may opt for voluntary repossession. This involves returning the vehicle to the lender before starting the repossession process. Although this will still have a negative impact on your credit, it may be less damaging than involuntary repossession. Additionally, voluntary repossession allows you to avoid fees associated with the repossession process.
The Impact of Repossession on Your Credit
Having your vehicle repossessed can have a significant impact on your credit score, making it more difficult to obtain loans or credit in the future. Repossession is considered a serious derogatory mark on your credit report and can remain on your report for up to seven years.
In addition to immediate damage to your credit, repossession can have other long-term financial consequences, including:
- Deficiency Balance: If Exeter Finance sells the repossessed vehicle for less than the amount of the loan you owe, you may be responsible for paying the remaining balance. This is known as a deficiency balance, and failure to pay it can result in further damage to your credit and possible legal action from the lender.
- Difficulty Obtaining Future Loans: Having a hold on your credit report can make it difficult to get auto loans, mortgages, etc. in the future.