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What happens in a repossession when the car is worth more than the loan?

Thursday Nov 19,2009 12:01 AM
By diddy
In Others

I would like to know what happens if a car is repossessed and sold at auction, if the sale nets more money than the loan’s value. So if for example 00 were owed on a car, and it auctioned for 00, who gets the extra 00?

Auction, Car Loan, Car Worth, Extra, Loan Value, Money Loan, Money Value, Repossession

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One Comment

Ted says:

November 19, 2009 at 12:01 am

The creditor has to return the excess to the borrower. Remember, the borrower owes not only the outstanding principal, but also accumulated interest, late charges and collection costs.

Also, the lender is not required to try to get the best price for the car. They are allowed to go for a quick sale below market value. If an employee of the lender offers to buy it right away for 4000, the manager might agree to sell it to him just to get the bad loan off the books. (I have seen this happen.)