After you take out a car loan, there will be a lien (held by the lender) on the vehicle until your full balance is paid. If you don’t make payments as agreed, certain penalties could come into play, like late fees, extra interest or, in the worst of cases, repossession. This is when the lender takes the car back, so they can reclaim part of the money you owe.   Essentially, the lender still owns the car while your loan is in effect, which means they can legally sell when you default. They may do this by selling it for its fair market price or putting it up for auction.