repossession
The legal seizure of property — typically a vehicle — by a lender when loan payments are missed.
Example
“After 90 days of missed payments the car was repossessed at 3am without warning.”
Memory Tip
REPO — they come and take the asset back. Often without notice.
Why It Matters
Repossession directly impacts your credit score and financial future, as missed payments can result in losing valuable assets while still owing the remaining loan balance. Understanding this risk helps you prioritize loan payments and recognize the serious consequences of defaulting on secured debts.
Common Misconception
Many people believe that if their car is repossessed, they no longer owe the remaining loan balance. In reality, after the lender sells the repossessed vehicle, you may still be responsible for paying the difference between what was owed and what the vehicle sold for, known as a deficiency.
In Practice
Sarah financed a car for 25,000 dollars with a 60-month loan. After missing three consecutive payments totaling 1,200 dollars, the lender repossesses her vehicle. The car sells at auction for 18,000 dollars, leaving a deficiency of 7,000 dollars that Sarah may still be legally required to pay to the lender.
Etymology
From Latin 'repossidere' meaning to take back possession.
Common Misspellings
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