What happens in a repossession when the car is worth more than the loan?

I would like to know what happens if a car is repossessed and sold at auction, if the sale nets more money than the loan’s value. So if for example $4000 were owed on a car, and it auctioned for $6500, who gets the extra $2500?

The creditor has to return the excess to the borrower. Remember, the borrower owes not only the outstanding principal, but also accumulated interest, late charges and collection costs.

Also, the lender is not required to try to get the best price for the car. They are allowed to go for a quick sale below market value. If an employee of the lender offers to buy it right away for 4000, the manager might agree to sell it to him just to get the bad loan off the books. (I have seen this happen.)

Repossessed Car Auctions

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