Repossessed cars: should you buy one?

Find out what happens if your car is repossessed, and what to look out for if you're thinking of buying a repo car

Finance is a major cog in the wheel of buying a car, especially when acquiring one new. Indeed, over 90 per cent of new cars bought privately in 2018/19 were financed in some way. But what happens if you can't keep up with those monthly repayments? In the worst case, your car may be repossessed, as the finance company attempts to recover any outstanding costs from you.

If you're struggling to keep up repayments and have arranged the finance via a car dealer, then you may be tied into the agreement. If this is the case, the paperwork of the agreement should have information on what to do if you can't keep up repayments. You should get in touch with the finance provider, rather than the dealer where you bought the car, as they will have more knowledge and ability to arrange what happens next if you can't keep up your repayments.

Another useful contact is Citizens Advice, as they will be able to provide free information on how to handle outstanding debt. It's more of a general service for people needing help with all kinds of debt, so it may not be able to cover the specifics of your finance agreement, but it's still a useful port of call all the same.

If the worst does happen and your car is repossessed, that might not be the end of the situation, as the finance company may want to try and recoup any outstanding interest that the value of the car may not cover. If you took out dealer finance, then the only asset that is at risk is the car itself, and there is no risk to any of your other assets. Either way, failing to keep up repayments on a loan will have a negative impact on your credit rating, and means it might be harder to arrange finance in the future.

When is a car repossessed?

A finance company will usually only repossess a car as a last resort, once all other avenues of repayment have been exhausted. If your car is going to be repossessed, then a bailiff will be arranged by the finance company to retrieve the car, so that the finance company can sell the car to recoup any money lost in missed repayments.

Some people may feel aggrieved when a bailiff, or repo man, comes to take their car away. However, any issues you may have with the situation of having your car repossessed should be directed towards the finance company, rather than the repo men, who are just doing their job. As far as the finance company is concerned, the vehicle is an asset, and they are taking the vehicle back to recoup the losses from the broken finance agreement.

How can I tell if a car has been repossessed?

If the finance company has repossessed a vehicle, it will be sent to auction as soon as possible so the finance company can recoup as much as they can from the defaulted agreement. Repo cars are sold on at specialist auctions that are only open to trade customers, so there's no direct way of buying a repo car.

There's no obvious way to find out if a car you're looking at has been repossessed, but if you carry out an HPI Check, it will tell you if the car you're looking at has any outstanding finance against it. If it does - and 25 per cent of HPI Checks come back with an outstanding finance warning - it means that whoever is selling the car doesn't have the right to do so, as the car is still technically owned by the finance company.

If a check comes back clean, then you know there will be no finance company looking for reimbursement, but aside from that, there's no obvious clue to a repo car. The only other giveaway there may be is with the condition of the car. If somebody is struggling to keep up repayments on a car, then they are likely to find it difficult to keep the car maintained. Servicing could well have fallen by the wayside, and even cleaning the car could take a back seat, too.

If the person who has taken out the finance feels resentful towards the finance company, they may have damaged the car before it being repossessed. Still, if a car is in a shabby state and missing some service history, that means you could well pick up a bargain that could easily be brought back up to scratch.

How much is your car worth? Find out with our free car valuation tool...

Recommended

Cheap car insurance for young drivers: top tips
Young drivers
Tips & advice

Cheap car insurance for young drivers: top tips

Our guide on car insurance for teenage drivers that could help save hundreds on your annual bill
12 Oct 2021
Best new car deals 2021
Best new car deals 2021
Best cars & vans

Best new car deals 2021

Thinking of buying a new model? Check out our list of the best new car deals right now
11 Oct 2021
What is a V5C vehicle log book? Rules for car buyers and sellers
New V5C document
Tips & advice

What is a V5C vehicle log book? Rules for car buyers and sellers

Understanding the V5C log book and the rules around it, whether you're buying or selling a car
8 Oct 2021
First-year motoring costs have risen dramatically over last decade
Hands holding a toy car and coins
News

First-year motoring costs have risen dramatically over last decade

First-year VED road tax costs are higher by as much as 178 per cent in 2021 compared with 2011, while a VW Golf costs 72 per cent more
10 Sep 2021

Most Popular

New Kia EV6 2021 review
Kia EV6 front tracking
Kia EV6

New Kia EV6 2021 review

With a sporty drive, 300-plus miles of range and plenty of tech - could the new Kia EV6 be one of the best electric cars on sale?
19 Oct 2021
Cupra Born vs Mercedes EQA vs Volvo C40 Recharge: 2021 group test review
Cupra Born vs Mercedes EQA vs Volvo C40 Recharge
Car group tests

Cupra Born vs Mercedes EQA vs Volvo C40 Recharge: 2021 group test review

The all-electric Volvo C40 Recharge meets another premium wannabe in the Cupra Born. But can they beat the super-posh new Mercedes EQA?
19 Oct 2021
New Ford Mustang Mach-E GT 2021 review
Ford Mustang Mach-E GT - front
Ford Mustang Mach-E

New Ford Mustang Mach-E GT 2021 review

With 480bhp and a 310-mile range, does the new Ford Mustang Mach-E GT offers the perfect blend of performance and practicality? We find out...
19 Oct 2021