Money Wellness

Updated 27 August 2025

Can my car be repossessed?

If you fall behind with your car finance payments, your lender may take your vehicle back. This is known as repossession.

This guide covers when a lender can repossess your car and how to avoid it.

The repossession process?

If you’ve taken out car finance to buy a car, the lender or leasing company still owns the vehicle until you’ve made all the agreed payments. The lender can repossess the car if you don’t make the repayments.

This won’t happen straight away, though. Before that, you’ll get a number of missed payment reminders and the opportunity to catch up. After you’ve missed two or three payments, you’re likely to get a default notice. At this point, if you don’t agree an arrangement to catch up with your payments, your lender can start repossession proceedings.

Less than a third paid back

If you’ve paid less than a third, the lender can repossess the car without a court order. When working out whether you’ve paid less than a third, they’ll take into account everything you would have paid if the agreement had run its course, including the deposit, interest and any fees.

Without a court order, the lender will need your consent to take the car from your drive or garage. If you don’t give your consent, they’ll need to go to court for a repossession order to take the car. They won’t need a court order if you park the car in a public place, like the road.

More than a third paid back

If you’ve paid more than a third back, the lender will need a court order to repossess regardless of where the car is parked.

If you want to keep your car

If your lender is trying to repossess your car and you want to keep it, you can apply for a time order using an N440 form. A time order can be used to ask for:

  • more time to catch up on missed payments
  • more time to repay the debt, meaning lower monthly payments
  • delay repossession proceedings 

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What happens after my car is repossessed?

In most cases, a lender will sell the car. The money they get from the sale is used to repay your debt.

If there isn’t enough to cover the full amount, you’ll have to pay the rest as well as any court fees. This is called a shortfall. 

Can I get my car back after it’s been repossessed?

You may be able to get your car back if you and the lender can agree a revised payment agreement but it’s better to try and stop your car being repossessed first e.g. by asking for a payment holiday or more time to repay the debt to reduce the amount you’re paying each month. 

Will a car repossession show on my credit file?

A repossession stays on your credit file for six years from the date of the first missed payment. This will damage your credit score and you’ll probably find it harder to borrow money or access credit during this time.

If the car is sold for an amount that covers what you owe in full or you repay any shortfall while the repossession is still on your credit file, the debt will be marked as ‘settled’. Some lenders may view this more positively, as it suggests you co-operated with the lender and took responsibility for your debt.

Can I stop my car being repossessed?

If you’re struggling to make your repayments, talk to your lender as soon as possible to see if they can help. Possible options include:

  • a payment holiday
  • extending the term to reduce your monthly payments
  • freezing interest on missed payments
  • agreeing a payment plan for your arrears
  • letting you sell the car privately (you may get more for it this way, as opposed to the lender selling it at auction)

Voluntary termination

If you can’t afford the repayments and you’ve paid more than 50% of what you owe, you can see if giving the car back early is an option. This is called voluntary termination.

You do have to meet certain criteria but, if your lender agrees to it, there’ll be nothing to pay after you return the car.

Don’t get ‘voluntary termination’ mixed up with ‘voluntary surrender’. With voluntary surrender, you still have to pay for the car even after returning it.

Help and advice

For further advice on anything to do with debt and vehicles, including your rights if bailiffs want to take your car, we’ll be happy to help.

Michelle Kight - Money Wellness

Written by: Michelle Kight

Financial content writer

Michelle is a qualified journalist who spent over seven years writing for her local online newspaper. Having grown up in some of the North West’s most deprived areas, she has a first-hand and empathetic understanding of what it means to face serious money worries. With a strong interest in mental health issues, she is a keen advocate of boosting the accessibility of financial wellness services.

Reviewed by: Daniel Woodhouse

Financial Promotions Manager

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Last updated: 27 August 2025

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