Anyone who has gone through the nightmare of their car disappearing from its parking spot–and realizing it wasn’t stolen, but repossessed–likely knows the incredibly devastating financial ramifications in store. Outstanding debt that leads to having your property repossessed not only kills your credit, but once it’s been taken, you either have to try and buy the property back or lose all the money you put into it.

However, what about insurance rates? When it comes to cars, will having yours repo’d lead to skyrocketing auto insurance rates, too?

How Auto Repossession Happens

Most people take out a loan to finance a new car purchase since coming up with the full price on the spot is not a realistic option for most. However, if you finance your car, you owe money to a lender and sign a contract agreeing to pay them back and the car serves as the collateral. If you then consistently fail to make your payments on time, the lender will simply take back the car (or send a debt collection company to get it).

A Car Repo’s Effect on Insurance

While having your car repossessed doesn’t have a direct effect on future insurance rates, the occurrence will still have a major impact on the rates you’re offered down the line when you actually own a car again.

That’s because, as mentioned, having property repossessed significantly decreases your credit rating. Why does that matter? Insurance companies often evaluate your credit when calculating your premium, in addition to other factors like your driving record, age and vehicle make and model.