After a lender repossesses your vehicle, you no longer own it and must take some steps to remove your name from anything to do with the car, including the tag.
Key Points
- Your tag is proof your car is legal, but when you no longer own it, you must cancel the tag to remove yourself from vehicle ownership so you aren’t held liable for anything that occurs with the car after repossession.
- If you get your car back after repossession, you may reinstate your tag, but you must go through the Department of Motor Vehicles.
- You may transfer your tag to another vehicle if you meet the state laws regarding reinstatement.
What Is a Vehicle Tag?
The vehicle tag is the sticker typically in the corner of your license plate. The tag lets law enforcement know your vehicle is properly registered with the state. Tags are good for one year and must be renewed before expiration to avoid penalties.
A vehicle tag usually has the month and year it expires, such as Feb 24, which means it expires on the last day of February 2024. A valid tag ensures your vehicle is up-to-date on all legal requirements, including insurance, registration, and taxes, if applicable.
How to Cancel Your Vehicle’s Tag After Repossession
How you cancel your vehicle’s tag depends on your state’s laws. Some lenders automatically cancel it for you. However, some states require the vehicle owner to go to the DMV and complete an affidavit of repossession.
Lender Tip:
You cannot instantly transfer license plates from a repossessed vehicle to any other vehicle. You must reinstate the tags before transferring them, which may require covering the repossession costs first.
Steps to Take After Repossession
In addition to the car’s title, there are a few other factors to consider after repossession. Owning a car requires insurance, registration, and license plates. If you no longer own the car, you should learn the necessary steps to cancel them and remove your name from the vehicle.
Your first step may be to contact the lender to discuss your options, but if repossession is the answer, contacting your insurance agent and the DMV should be next.
Take these steps after a vehicle repossession:
- Contact the lender: Talk to the lender about your options to get the car back.
- Cancel your car insurance: You can cancel your insurance to save a little money.
- Contact the DMV: They’ll tell you how to cancel the registration/license plates.
- Check the title: Ensure your name is no longer on the title since you don’t own it.
Reinstating Your Tag After Repossession
If you can get your car back after repossession, you’ll likely need to reinstate the tags. Contact your local DMV to determine what your state laws require.
Steps to Reinstate a Tag After Repossession
- Pay outstanding fees: You must take care of any outstanding repossession fees. Even if you settled the loan balance, there may be towing, storage, or legal fees you must pay.
- Secure insurance: In all but two states, New Hampshire and Virginia, you must have liability car insurance. To reinstate your tags, the DMV will require proof of insurance on the vehicle before you can drive.
- Provide documentation: Reinstating your tag is like applying for a new tag. The DMV will need documentation, including your license, registration, and proof of loan reinstatement.
- Pay the fee: Most states charge fees to reinstate your license plate tag. You must pay these fees in full before they will issue a new tag, allowing you to drive the vehicle legally.
Transferring the Vehicle Tag After Repossession
If you’ve lost your car to repossession, but have another vehicle to drive, you must register it. Since you already have a vehicle tag, it may cost less to transfer it, versus obtaining a new one.
Is it Possible to Transfer a Vehicle Tag After Repo?
Each state has different laws. Contact your local DMV to determine if you can transfer your tag after involuntary or voluntary repossession. If so, you’ll take the same steps as reinstating your tag after repossession, including taking care of costs related to the repossession. The only difference is you’ll provide information for the new vehicle to get approval.
Do You Need To Surrender the Vehicle Title After Repossession?
In most states, the lender must send a notarized copy of the loan agreement and a copy of the final demand letter sent to you before they repossess the vehicle.
The lender cannot sell the vehicle until the title is in their name, so it’s in their interest to handle the process. It’s always a good idea to ensure your name is off the title. This is especially important before the car goes to the auction and becomes someone else’s property.
Canceling Insurance After Repossession
Consider your options before canceling your car insurance.
Owning Another Car
If you’ll have a car to drive relatively soon, avoid a gap in coverage. Most insurance companies charge higher premiums when you don’t have continuous coverage.
Not Owning Another Car
However, if you don’t have a vehicle to drive for a while, you may cancel the coverage and save money as you figure out your next steps.
We suggest talking to your insurance agent about your options to determine which is best.
Can Repossession Affect Your Ability To Drive Legally?
A car repossession doesn’t affect your driver’s license. While you cannot legally drive a repossessed car, especially after your name is removed from the title, you still have a valid driver’s license.
However, most state laws require you to have a legally registered car with proper tags to drive it. If you drive someone else’s car, ensure it has proper registration and that you are insured to drive it.
FAQs
What Happens If Repo Never Finds Your Car?
The repo man has more tactics to find your car than you might think. However, if they are unsuccessful, they let the lender know. The lender may then take more legal action, including getting a court order mandating you to return the vehicle.
What Happens to Your Title In Repo?
Lenders typically contact the DMV to have your name removed from the title immediately after repossession. This allows them to legally transfer the vehicle to another owner if they sell it at auction or in a private sale.
How Many Car Payments Can You Miss Before Repossession?
In many states, lenders may repossess a vehicle after one missed payment. However, many lenders don’t go to such lengths until they are sure they cannot recoup the balance owed, usually after several past due payments. They will likely send a notice about the missed payments and warn you of the possibility of repossession but may not follow through for a few months.
How Long Does a Repo Stay On Your Credit?
A repossession stays on your credit report for seven years. It affects your credit score the most in the first couple of years. However, future lenders may see the delinquency on your credit report for seven years from the date it occurs.
Can You Get a Repossessed Car Back?
Some lenders offer options to get your repossessed vehicle back. This often means paying the full balance owed. However, some lenders may allow you to make up the missed payments, including late and other fees. If you can’t make up the loan payments, you may also attend the auction and bid on the vehicle to buy it back.
Final Thoughts
Knowing what happens to your tag when your car is repossessed is important. If you can’t get the car back, you should ensure the tag is canceled. Each state’s laws differ, so contacting your DMV should be the first step after determining you cannot recoup the car.
Taking on a car loan is a big responsibility. You agree to repay the amount owed in equal monthly payments. You may lose the car in repossession if you don’t follow the agreement.
Remember, even if the lender sells the car, you may owe a deficiency balance if they can’t recoup the full amount owed. It’s in your best interest to find ways to get current on your loan to avoid losing your car.
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.