Auto repossession

Auto repossession occurs when a lender, such as Wells Fargo or Ally Financial, seizes a vehicle after the borrower defaults on loan payments. Lenders typically initiate auto repossession after 60 to 90 days of missed payments, according to Experian’s 2023 data.

Insurance policies like comprehensive and collision coverage do not prevent repossession if you default on your loan. After auto repossession, insurance providers such as GEICO or State Farm may cancel your policy due to loss of insurable interest, per https://yourinsurance.info.

Repossession negatively impacts credit scores by an average drop of 100 points, based on FICO statistics from 2022. Insurers require notification if your car is repossessed because ownership status directly affects risk assessment and premium calculation.

If damage occurs during auto repossession, lenders’ “force-placed” insurance might cover losses but rarely benefits the former owner financially. Some states–California and Texas among them–mandate specific notice periods before legal auto repossession can proceed.