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Will the Right of Reinstatement Help Me Get My Truck Back?

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Mark Cappel
UpdatedMar 21, 2023
When a truck is repossessed, will anybody else refinance the remaining balance? I have a poor credit score.

When your truck is repossessed, will anybody else refinance the remaining balance? I have a poor credit score.

Let me paraphrase your question so that the facts you presented a bit clearer to me. It appears that you you had a vehicle loan, got behind on your payments and the creditor (the finance company or bank) repossessed the vehicle. You have poor credit, and want to know if there are companies willing to lend people in your situation enough to pay-off the loan so that you can take possession of the vehicle again.

First, before we discuss the loan, you need to determine if your state allows consumers the "right of reinstatement" in vehicle loans. The right of reinstatement allows a borrower who can catch up on the delinquent balance as well as the late fees, collection costs, and repossession costs to reclaim his vehicle. Some states not allow a right of reinstatement and others do not.

Because you did not include your state of residence in your message I cannot say whether your state allows a right of reinstatement. Therefore, I urge you to consult with an attorney in your state who has experience in consumer law and ask about this issue. If your state does not allow a right of reinstatement, then even if you could get a loan somewhere, it may be too late to get your truck back.

Below 500 Credit Score

Second, let us discuss the loan. Generally speaking, the riskier the loan the higher the percentage rate you will pay on the loan. All other things being equal, a person with an 800 credit score will pay a lower APR for a given loan than a person with a 420 credit score, because the person with the 800 is a lower credit risk.

However, any credit score below 500 is considered extremely poor, so poor that most lenders will not work with you.

It will be hard to find anyone to lend you money to exercise your right of reinstatement, due to your very low credit score. If you do find anyone, be prepared to pay a very high interest rate. I do not have a specific recommendation for where you can find such a loan because I have not worked with any of these types of lenders.

Deficiency Balance

Keep in mind that if you can't work out anything with your lender to get back your truck, then you will be on the hook for the deficiency balance. The truck will be auctioned off and you will still owe the difference between the auction price and your loan balance. You may also be liable for fees and penalties associated with the repossession and storage of your truck.

I hope this information helps you Find. Learn & Save.



Struggling with debt?

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2022 was $16.91 trillion. Housing debt totaled $12.26 trillion and non-housing debt was $4.65 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Michigan, 26% have any kind of debt in collections and the median debt in collections is $1374. Medical debt is common and 13% have that in collections. The median medical debt in collections is $440.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.

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AAlex, May, 2013
I traded in my used car for new one, dealer paid it off. New car loan can't get approved. Dealer wants to re-instate my original car loan. What action do I need to take? Is this legal in my Cerritos California? Do I have to go thru another contract to get the loan reinstated?
BBill, May, 2013
Read the Q&A at Do Not Qualify for Vehicle Financing, and in particular the "Bait and switch financing" section on that page. Please ask any follow-up questions you may have on that page.