Even after you’ve lost possession of your car through repossession, the financial implications might not be over. It’s important to understand that you could still be responsible for certain expenses related to your vehicle, even when you no longer drive it. Here’s a breakdown of what you need to know about post-repossession costs.
Understanding Repossession Fees
When your lender repossesses your car, they typically incur costs to pick it up and store it. These repossession costs are generally passed on to you. However, there are rules in place to protect you from unreasonable charges. The fees your lender charges must be considered “reasonable.”
The definition of “reasonable” isn’t fixed and can be interpreted by courts. It often depends on several factors, including the type of vehicle that was repossessed, the method used for repossession, and the location where the car was taken from. Don’t hesitate to request a detailed list of all repossession costs from your lender to ensure transparency and understand what you’re being charged for.
Deficiency Balance and Surplus After Car Repossession Sale
After repossession, lenders usually sell the vehicle to recover the outstanding loan amount. This sale can lead to two financial outcomes for you: a deficiency balance or a surplus. If the sale price of your repossessed car is less than the remaining balance on your loan, plus the repossession fees, you will be responsible for paying the difference. This difference is known as the “deficiency balance.”
Conversely, if your car is sold for more than what you still owe on the loan, after covering repossession fees and sale expenses, you are legally entitled to receive the “surplus” – the excess money.
It’s crucial to be aware that lenders are legally obligated to sell your repossessed car in a “commercially reasonable manner.” This means the sale process should be fair and designed to achieve a reasonable market price for the vehicle. Knowing the final sale price is important, and you have the right to question it. If you believe the sale price obtained for your repossessed car was unreasonably low, it’s advisable to consult with an attorney to explore your legal options.
For instance, imagine you still owe $10,000 on your car loan, and after repossession, the lender sells it for $7,500. In this scenario, you would owe a deficiency balance of $2,500, in addition to any outstanding repossession fees. If you fail to pay this deficiency, the lender has the right to employ a debt collector to recover the amount.
On the other hand, consider if the repossessed car in the same example was sold for $12,000. After covering the $10,000 loan balance and associated fees, the remaining amount would be considered a surplus, and you would be entitled to receive this money back from the lender.
Your Rights and Resources
Remember that your state laws may provide you with additional rights and protections in repossession situations. To gain a deeper understanding of your rights, you can reach out to your state attorney general or your state consumer protection office. These resources can offer valuable guidance specific to your location. Furthermore, seeking advice from a private attorney or your local legal services office can provide personalized support and ensure your rights are protected throughout the repossession process. They can help you navigate the complexities and understand if actions like “can i have a bank.repo.my.car” situation are being handled correctly and legally.
