The financial costs of default
Lenders must bear not only the cost of defaulted loans, but the expenses of recovering their collateral when borrowers fail to make the scheduled payments on their car or truck. Uninsured vehicles present an even greater risk to the lien holder, since these vehicles may represent a total loss in the event of an accident and may even create additional financial liability for the lending institution if it is held responsible for any damages caused by the vehicle. The costs to the borrower are also significant and typically include a damaging entry on the borrower’s credit report, the loss of the vehicle and continued liability for any outstanding amounts due on the loan.

The recovery process
Once the lender contacts the repossession company, the process of recovering the vehicle is set in motion. The lender typically provides name and address information for the borrower along with detailed information on the vehicle to be recovered. In some cases the recovery company can simply send an agent to pick up the vehicle and return it to the lender. If the borrower has moved or has chosen to conceal the vehicle, however, it may be necessary to perform skip tracing to determine the current location of the car or truck to be recovered. These investigative techniques often involve calls to neighbors, employers and other individuals who may have knowledge of the whereabouts of the borrower or the vehicle. Once the vehicle or the owner has been located, the recovery company can pick up the vehicle for return to the lender. Most recovery companies employ field agents who are trained in conflict resolution and who are physically able to take care of themselves if the situation should turn violent due to a negative reaction from the borrower during the repossession process.

What repossession means
Repossession of a vehicle simply means that the lender is taking back the collateral for the loan. Depending on the terms of the contract, even one day of default or late payment may be sufficient for the lender to begin repossession proceedings. In most cases, no legal action is required in order for the lender to take back the property. Repossession does not end the debt owed by the borrower; even after the vehicle has been recovered and sold at auction, any remaining balance is still the responsibility of the borrower.

How repossession works
Most lenders employ the services of professional repossession companies in order to ensure that the process is handled legally and quickly. Recovery and repossession companies employ trained agents who locate and recover the vehicle, usually without warning and without informing the owner beforehand. This allows the recovery company to work without harassment or fear of interference. In some cases, the borrower may attempt to hide the vehicle. Trained spotters and skip tracers use advanced technological methods to locate these vehicles and return them to their rightful owners as rapidly as possible.

Other reasons for vehicle recovery
While the majority of recovered vehicles are repossessed due to loan default, there are a few other reasons why recovery might be necessary. In some cases, fraud may have occurred in the purchase or transfer of title of a new or used vehicle. Bad checks and other dishonored financial instruments are the usual culprits in this regard and may also prompt criminal charges against the individual who purchased the vehicle in bad faith. Additionally, car rental agencies may employ vehicle recovery companies to track down and retrieve rental cars and trucks that are not returned within the proper time period.

While most repossessions occur in relation to cars and trucks, other vehicles may also be repossessed including boats, motorcycles, aircraft and over-the-road semis. In these cases, fees may be doubled or tripled due to the difficulties that each of these vehicle types represents for the recovery company.