Every state has different laws regarding who must notify the DMV of a car repossession. You might wonder do you have to notify the DMV if your car is repossessed. Typically, the car loan lender is responsible for alerting the DMV of the repossession of motor vehicles. 

Still, it’s a good idea to follow up yourself so you aren’t held liable for anything to do with the car since you’re the registered owner with the state.

Key Points

  • Notifying the DMV of a repossessed vehicle protects your liabilities for the vehicle
  • Lenders may notify the DMV for you, but it’s always a good idea to follow up to ensure the process is completed accurately
  • You may have redemption or reinstatement options even after a repossession
  • Communicating with your lender throughout the process is important, whether you want to reinstate the loan or be clear on the next steps in the repossession if you can’t make up what you owe.

When Does a Car Get Repossessed?

Most states allow the loan company to repossess a vehicle after a single default on a car loan, but most won’t. Many lenders try to recoup the payments owed first, resorting to repossession only when they cannot recoup the funds.

Most states have laws that protect consumers from a breach of peace by the repo company. They may need a court order to enter personal property and take the vehicle. No repossession representative can ever harass or cause a disturbance to obtain the vehicle.

For example, if you live in Florida and miss one payment on a loan agreement, the loan company may take possession of the vehicle

Lenders don’t need a court order if they don’t breach the peace or cause disturbance. However, they can get a court order for repossession if they can’t access the vehicle peacefully.

What Happens When a Lender Repossesses a Car?

When the lender repossesses the vehicle, they take it into their possession and sell it at a vehicle auction to the highest bidder. If they get enough money to cover the defaulted loan amount, no further action is required from you. But if the lender sells the car for more than you owe plus fees, you may be eligible to receive the surplus, but it varies by state law.

However, if they can’t sell the car for the full amount owed, they may be able to sue you for the balance still owed.

Steps To Take After Repossession Occurs

If the repossession occurred already, knowing the steps to take is important. You may still have an opportunity to regain possession of your vehicle.

  • Discuss options with your lender: Depending on your state’s laws, you may be required to pay the loan in full or make up the past due payments plus any repossession fees.
  • Pick up your personal belongings: Call the tow yard to make an appointment to pick up your personal items, and license plates if the repo company didn’t leave them.
  • Contact the DMV for next steps: You may need to complete an affidavit attesting to the repossession to cancel your registration and surrender your license plates.
  • Cancel auto insurance: Contact your insurance provider to see what’s necessary to cancel your insurance. You may owe an early cancellation fee if you prepaid.
notify the DMV if your car is repossessed

Voluntary vs. Involuntary Repossession

Repossession doesn’t always have to be involuntary. If you know you can’t afford the car any longer, you may voluntarily relinquish it.

What Is Voluntary Repossession?

Voluntary repossession means you give up the vehicle willingly rather than waiting for the lending institution to take the vehicle. Many people choose voluntary repossession when they lose their job and know they can’t afford the car. 

To voluntarily repossess your vehicle, do the following:

  • Contact the lender to tell them of your decision
  • Choose a meeting place to turn in the vehicle
  • Follow the lender’s instructions to avoid legal issues

Voluntary repossession has similar consequences, including damaged credit and losing your car. However, some lenders and credit bureaus look at a voluntary repossession more favorably because you recognized you couldn’t keep up with the payments and returned the car to make up for the default.

What Is Involuntary Repossession?

Involuntary repossession is the opposite. It happens when you don’t meet your loan term agreement, and the lender has exhausted all other options to cure the default without success. Lenders sell repossessed vehicles at a public auction, trying to make up for the outstanding balance on your loan. 

An involuntary repossession may hurt your credit score more than a voluntary repossession because of the work the lending institution must put in to take possession of the vehicle.

Voluntary RepossessionInvoluntary Repossession
Lose possession of vehicle
Surrender vehicle yourself
Vehicle taken without notice
Damages credit scores
Looks favorable to future lenders
Leaves an amount to repay

Reasons To Notify the DMV of Your Repossessed Vehicle

The most significant reason to notify the DMV stating a repossession occurred is to ensure you are no longer responsible for the vehicle. This includes:

  • Eliminating your responsibility for registration fees
  • Taking your name off the car so you don’t owe taxes
  • Eliminating risking any liabilities caused by the car

My Car Was Repossessed. How Do I Get It Back?

If your car was repossessed before you could do anything about it, you may still get it back. Each lender has different rules regarding if and how you can get your car back after repossession, but it may be possible through redemption or reinstatement.

What Is Redemption?

The right of redemption is the toughest way to get your car back, but it’s an option in most states. The right of redemption means you have a grace period to come up with the full amount owed on the vehicle to make it yours. 

Here’s what to consider:

  • You’ll likely owe more than the loan balance because of the repossession, tow, legal and storage fees
  • You should receive notice within five days of repossession regarding the amount necessary to redeem the vehicle
  • Don’t redeem a vehicle whose payments you cannot afford as it will only lead to another repossession

What Is Reinstatement?

The right to reinstatement allows a grace period to reinstate your loan agreement. The requirements vary by lender, but here’s what to consider:

  • You’ll likely owe any past due payments plus new charges, such as towing, legal, and administrative fees
  • Your existing loan agreement may have the right to reinstate. Check it to ensure your rights are protected.
  • Lenders must give you notice in writing regarding how long you have to reinstate the loan, usually 15 days or less


What Happens to Your Title in a Repossession?

After the lender repossesses your vehicle, they must notify the DMV of the repossession to remove you from the title. Most states require lenders to provide a notarized copy of the loan agreement and the demand letter. They must also complete an Affidavit of Repossession.

Do Repo People Have the Keys to Your Car?

Most repossession representatives don’t have keys to your vehicle. Instead, they tow the vehicle to the repossession yard and have it rekeyed so they can sell it at auction. The cost for this service becomes a part of the amount you may owe.

How Does a Repo Man Find Your Car?

Repossession representatives receive information from your lender regarding your home address and where you work. They begin with these areas to find your car. If you successfully hide the car from these places, they continue looking within a reasonable distance from your home. 

This includes on the streets nearby and at local establishments, such as grocery stores, malls, and other establishments.

Attempting to hide your car to evade repossession can result in severe adverse consequences. We strongly discourage this course of action.

How Many Car Payments Can You Miss Before Repo?

Legally, a lender can repossess a vehicle after one missed payment, but most lenders won’t. They will alert you of the default and try to cure it first. If they are unsuccessful after a few months, they may start the repossession process.

Can I Cancel My Car Insurance on a Repossessed Vehicle?

There isn’t any legal requirement to keep car insurance on a repossessed vehicle. However, you may want to keep it to avoid much higher premiums when you get another car. If your insurance lapses, it is a red flag for insurance companies, causing them to increase your premiums. 

Getting new insurance may be more difficult or expensive if you go even one month without insurance.

Final Thoughts

Most state laws don’t require you to notify the state DMV if your car is repossessed, but it’s usually a good idea. If you cannot reinstate or pay the loan balance, you must ensure the car title and registration are no longer in your name.

Removing your name from the title and registration ensures you aren’t legally responsible for the car or anything that happens after the lender takes possession. 

You may need to turn in your license plate or complete an affidavit of repossession, but it gets the car out of your name. You’ll still have the financial details to work out, including paying the difference owed after any sale proceeds.

Written by Samantha Hawrylack

Written by

Samantha Hawrylack

Samantha Hawrylack writes for our company and is an expert in personal finance. Sam received her Bachelors of Science in Finance and her Masters in Business Administration from West Chester University of Pennsylvania. She began her career in the financial services industry and shifted to an entrepreneurial role where she could directly impact clients. Sam has an impressive background in personal finance and business management.