When a bank or lending institution determines that a person has defaulted on a load they generally issue a grace period for the person on the note or loan to pay the outstanding balance. If they do not make suitable arrangements for payment, a repossession order is executed. A bank repossession of a vehicle can harm your credit rating, prevent you from getting other loans and could end up costing thousands of dollars in court fees.

Commonly repossessed vehicles include automobiles, SUV"s, trucks, trikes and quads, recreational vehicles and farming equipment. An order or execution of repossession is often carried out by a contracted agent; they are hired to locate the vehicle and take possession of it. In most cases they do not have to serve the individual with any type of paperwork to do so. Vehicles are then transferred to the bank or ending institution for processing.

Depending on the amount owed, the institution has several options available to them. They can sell the vehicle outright to a third party, place it in an auction with other repossessed vehicles or write it off as a loss. Writing off a vehicle is only an option if it has been wrecked, abandoned or needs repairs that exceed its value. If the bank or institution is part of a regional chain they can opt to have the repossessed vehicles auctioned or sold as a lot. This eliminates having a public auction; used car dealerships are often contacted when there are more than fifteen vehicles that need processing.

Costs incurred during a bank repossession include the outstanding amount on the note, fees for the repossession contractor, storage fees, any repairs that need to be made, state inspection and the transfer of the title. In some cases the costs involved in a bank repossession exceed the amount owed on the vehicle or the actual worth of it. Regardless of the amount, the person on the note is responsible for the outstanding amount due as well as the cost incurred.

When a bank or lending institution is approached to finance a vehicle purchase they are not only looking at your credit score but your overall credit history, where you live and if you have defaulted on any loans in the past. These are all taken into consideration in case you renege on a loan and the vehicle needs to be repossessed. It is much harder to hide a fifteen foot recreational vehicle than it is a motorcycle.

Bank repossessed vehicle auctions are handled a little differently than other repossession or seizure sales. Banks and lending institutions want to resolve the issue as quickly as possible to recover the money that has been invested in the transaction. It is a rarity for a bank repossessed vehicle to be held in status for more than thirty days. The quicker they can process it and have it sold, the sooner they can have it removed from their outstanding debt ledger.