When a car is shared between two or more individuals, responsibility for payments, insurance, and upkeep can get messy—especially if the loan isn’t paid on time. Repossession becomes a real risk when monthly payments fall behind. Once the vehicle is taken, both parties can face serious financial and legal consequences. Depending on your agreement with the co-borrower or co-signer, one person may carry more of the burden. If your name is tied to the loan, your credit score could suffer. Understanding your rights and responsibilities ahead of time can prevent long-term damage to your budget and relationships.
You May Still Owe Money After Repossession
Even after the car is gone, you could still be responsible for the remaining loan balance. The lender may sell the vehicle at auction, but if it sells for less than what you owe, you and your co-owner can be held liable for the difference. If neither of you pays, it may go to collections or court. If your vehicle is repossessed, the lender will typically give you 21 days to either catch up the back owed amount or pay the balance of the loan. This short timeline can put extra stress on an already tight budget.
Repossession Can Affect Future Financing
If your car is repossessed, expect a drop in your credit score—sometimes by over 100 points. This can make it harder to qualify for new loans or secure favorable interest rates. Shared car ownership means the negative entry hits both credit reports if both names are on the loan. That kind of record doesn’t disappear quickly and may also hurt your ability to rent housing or qualify for a new car loan later. Repairing your credit will take time and likely require adjustments to your monthly budget.
Repair Shops Might Not Help if You Retrieve the Car
After getting your car back—whether by paying the loan or winning a court ruling—it might not be in the best shape. Damage can occur during towing or storage. Rough handling, weather exposure, or vandalism may require repairs. It’s worth noting that 75% of aftermarket auto repair is performed by independent auto repair shops, which may or may not be equipped to handle repossession-related damage depending on your location and car type. If unexpected repairs aren’t part of your budget, regaining use of the car may still be out of reach.
You Might Lose Personal Items
Items left inside the car are often removed and stored by the repossession company, but that doesn’t guarantee they’ll be returned. Some states require storage of your belongings for a set time, while others don’t. If there’s a delay in claiming them or your lender doesn’t notify you in time, your possessions may be discarded. Replacing these items—especially electronics or work-related tools—can strain your budget, particularly if you’re already managing loan-related debts.
Environmental Effects Are a Hidden Factor
When repossessed cars are auctioned and not sold, they may end up in scrap yards or recycling facilities. The Automotive Recyclers Association reports that about 86% of a vehicle’s material content can be recycled. That said, not all parts are reused responsibly. Shared car owners hoping to retrieve or repurchase the vehicle may find it’s already been dismantled or destroyed by the time they act. For those trying to stick to a specific budget, this removes any possibility of buying back the car at a reduced rate.
If your shared car is repossessed, the fallout can ripple through your finances, relationships, and even your day-to-day routines. You may owe more than you expected, face credit damage, or be stuck with expensive repairs if you get the car back. These setbacks can quickly throw off your entire budget. It’s essential to stay proactive—communicate clearly with your co-owner, know your repayment options, and keep up with deadlines. While a shared vehicle may seem like a smart idea initially, it can quickly become a shared burden if things go wrong. Planning with your budget in mind can help you avoid bigger issues down the road.
