Car trouble can be stressful, and financial strain can make it even worse. If you’ve financed a vehicle through a “buy-here, pay-here” dealership like DriveTime and are falling behind on payments, you might be worried about repossession. It’s crucial to understand what can happen when DriveTime repossesses your car and, more importantly, what your rights are in such a situation.
DriveTime Automotive Group, a major player in the buy-here, pay-here auto market, caters to customers with subprime credit. This means they often work with individuals who have lower credit scores and may have difficulty securing loans from traditional lenders. While this can be a helpful option for some, it also comes with higher risks, including the possibility of repossession if payments are missed.
When you take out a car loan, you’re essentially agreeing to a secured debt. The vehicle itself acts as collateral for the loan. If you fail to keep up with your loan payments, the lender, in this case, DriveTime, has the legal right to repossess the car. But what exactly does this process entail, and what actions can DriveTime legally take?
One of the first things you might experience if you fall behind on your DriveTime car payments is an increase in collection calls. As highlighted in a Consumer Financial Protection Bureau (CFPB) action against DriveTime, the company has been known for its aggressive debt collection practices. The CFPB found that DriveTime harassed borrowers through excessive calls, including calls to their workplaces and even to references provided during the loan application process. While the CFPB has taken action to curb these unfair practices, it’s important to be aware that persistent contact is often the initial step when payments are missed.
Car repossession by DriveTime typically occurs after you have defaulted on your loan agreement. The exact point at which DriveTime will initiate repossession can vary depending on your contract and state laws. However, missing even a single payment can technically put you in default. It’s crucial to review your loan agreement carefully to understand the specific terms related to default and repossession.
Once DriveTime decides to repossess your vehicle, they generally don’t need to provide you with advance notice. In many states, they can legally repossess your car as soon as you are in default without going to court first. This can happen at any time and from almost any location – your home, your workplace, or even a public parking lot.
The actual repossession process usually involves a repossession agent arriving to take the vehicle. They are legally allowed to take the car as long as they don’t “breach the peace.” This means they cannot use physical force or threats during the repossession. However, the experience can still be upsetting and disruptive.
After DriveTime repossesses your car, they are required to notify you about what will happen next. This notice typically includes information about:
- The sale of the car: DriveTime will usually sell the repossessed vehicle, often at auction.
- Your right to redeem the car: In many states, you have the right to “redeem” your car by paying the full outstanding loan balance, plus repossession and sale expenses, before it is sold.
- Deficiency balance: If the sale of the car doesn’t cover the full amount you still owe on the loan, you may be responsible for paying the “deficiency balance.” This includes the remaining loan amount, plus the costs of repossession and sale, minus the sale price of the vehicle.
It’s important to understand that DriveTime, like other lenders, must follow certain legal procedures during and after repossession. The CFPB’s action against DriveTime highlighted several areas where the company violated consumer financial laws, including:
- Inaccurate Credit Reporting: DriveTime was found to have furnished inaccurate repossession information to credit reporting agencies. This included misrepresenting the dates of repossession, which could negatively impact consumers’ credit scores for longer than necessary. This inaccurate reporting is a serious issue because it can harm your ability to obtain credit, housing, and even employment in the future.
- Failure to Handle Disputes: DriveTime also mishandled consumer disputes regarding inaccurate credit information. They sometimes failed to correct errors even after repeated complaints and in some cases falsely informed consumers that corrections had been made.
The CFPB’s enforcement action against DriveTime resulted in the company being ordered to pay an $8 million penalty and to change its practices. DriveTime is now required to:
- End unfair calling practices: They must cease harassing calls at work and to phone numbers after being asked to stop.
- Correct credit reporting information: DriveTime is obligated to correct inaccurate credit reporting and improve their dispute resolution processes.
- Provide credit reports to harmed consumers: Consumers affected by inaccurate credit reporting are entitled to receive free credit reports.
While these changes are a positive step, understanding your rights when facing car repossession by DriveTime remains crucial. If DriveTime repossesses your car, you have the right to:
- Proper Notice: You are entitled to receive proper notification about the sale of the vehicle and your right to redeem it.
- Accurate Credit Reporting: You have the right to expect accurate information to be reported to credit bureaus. If you believe DriveTime has reported inaccurate information, you have the right to dispute it.
- Fair Debt Collection Practices: While DriveTime’s past practices were deemed unfair, debt collectors, in general, are bound by the Fair Debt Collection Practices Act (FDCPA), which prohibits abusive, deceptive, and unfair practices.
If you are facing car repossession by DriveTime, it’s essential to take the following steps:
- Review your loan agreement: Understand the specific terms related to default, repossession, and your rights.
- Communicate with DriveTime: If possible, try to communicate with DriveTime to explore options to avoid repossession, such as a payment plan or loan modification.
- Keep records: Document all communication with DriveTime, including dates, times, and details of conversations.
- Monitor your credit report: Check your credit report regularly to ensure the information reported by DriveTime is accurate. Dispute any inaccuracies in writing to both the credit bureau and DriveTime.
- Seek legal advice: If you believe DriveTime has violated your rights or if you are facing a deficiency balance you cannot afford, consider seeking legal advice from an attorney specializing in consumer law.
Dealing with car repossession is a difficult situation. Knowing what to expect “when DriveTime repos your car” and understanding your rights is the first step in navigating this challenging process and protecting your financial well-being. The CFPB’s action against DriveTime serves as a reminder that consumers have rights and that companies must adhere to fair and legal practices.
