It’s a stressful situation to face: you’re behind on your car payments and worried about losing your vehicle. Many people fear the question, “when will they repo your car?” Understanding the auto repossession process is crucial to protect your rights and explore your options. If you’re struggling to keep up with your car loan, this guide will explain when a lender can repossess your car and what steps you can take.
Talking to Your Lender: Your First Step
If you anticipate trouble making your car payments, the most proactive step you can take is to contact your lender immediately. Don’t wait until repossession is imminent. Lenders are often willing to work with borrowers who communicate openly and honestly, especially if they believe you have a plan to catch up on payments. You might be able to negotiate a payment delay or restructure your payment schedule to something more manageable.
In situations where you’ve been impacted by unforeseen circumstances like a natural disaster – such as an earthquake, hurricane, or tornado – lenders may offer assistance programs. These programs could include deferred payments, extended repayment plans, grace periods, waived late fees, or a temporary halt to repossession efforts. However, it’s vital to formalize any agreement you reach with your lender in writing. This written agreement will serve as a record of the modified terms and prevent potential misunderstandings down the line.
If you can’t reach a modified payment plan, your lender might ask you to voluntarily return the vehicle. This is known as “voluntary repossession.” While it might seem like a better option, understand that even with voluntary repossession, you are still financially responsible for the “deficiency.” The deficiency is the difference between the outstanding loan balance and the amount the lender gets after selling your car at auction. Furthermore, both late payments and repossession, whether voluntary or involuntary, can negatively impact your credit score.
When a Lender Can Legally Take Your Car
In the majority of states, the moment you default on your car loan or lease agreement, your lender has the legal right to repossess your vehicle. Your loan contract will outline what constitutes a default, but the most common trigger is missing a payment deadline. It’s essential to review your contract to understand the specific terms.
Once you are in default, the lender is often legally permitted to repossess your car at any time, without prior warning. They can come onto your property to take the vehicle. However, repossession laws also stipulate that lenders cannot “breach the peace” during the repossession process. What constitutes a “breach of peace” varies by state, but it generally includes using physical force, threatening behavior, or taking your car from a locked garage without your explicit consent. Lenders must typically repossess vehicles without causing disturbances or confrontations.
The Role of Electronic Disabling Devices
When you initially financed your car, you might have agreed to the installation of an electronic disabling device. These devices, sometimes referred to as “starter interrupters” or “kill switches,” prevent your car from starting if your payments are not up to date.
The legality and implications of using a kill switch can depend on your loan contract and state laws. In some jurisdictions, activating a kill switch might be legally considered the same as repossession. In others, it could potentially be seen as a breach of the peace, particularly if it’s used in a way not explicitly outlined in your loan agreement. The legal interpretation of these devices can significantly affect your rights. If you have concerns about a kill switch installed in your vehicle, it’s advisable to contact your state attorney general for clarification on your rights and applicable laws.
What Happens After Your Car is Repossessed?
After repossession, your lender has two primary options: they can keep the car to offset your debt or sell it, usually through an auction. State laws in some areas require lenders to inform you about their plans. For instance, if the lender intends to sell the car at a public auction, they might be legally obligated to notify you of the auction’s time and location. This notification allows you the opportunity to attend and bid on your vehicle if you wish. In cases of a private sale, you might have the right to know the sale date.
Regardless of whether it’s a public auction or private sale, you generally have the right to buy back your vehicle. This can be done by:
- Paying the total amount due on the loan. This typically includes not just past-due payments but the entire remaining loan balance, along with repossession-related costs such as storage, auction preparation, and legal fees.
- Bidding on the vehicle at the repossession sale.
Some states also have “loan reinstatement” laws. These laws allow you to reinstate your original loan terms by paying only the past-due amount, plus the lender’s repossession expenses. This can be a more affordable way to regain possession of your car, but it’s crucial to check if your state offers this option and understand the specific requirements.
Retrieving Personal Property from a Repossessed Vehicle
Lenders are not legally allowed to keep or sell your personal belongings that were inside the repossessed vehicle, at least not immediately. State laws dictate the timeframe they must adhere to before disposing of personal property. In many states, lenders are required to notify you about any personal items found in the car and provide information on how you can retrieve them. It’s important to act promptly to reclaim your personal possessions after repossession.
Understanding and Paying the Deficiency Balance
The “deficiency” is the remaining balance you owe on your car loan after the lender sells your repossessed vehicle, plus certain costs associated with the repossession and sale process.
For example, if you owed $15,000 on your car loan and the lender sells the repossessed car for $8,000, the deficiency is $7,000. This amount is then increased by any additional fees outlined in your contract, such as repossession costs, lease early termination fees, or prepayment penalties. In most states, lenders have the legal right to sue you to obtain a deficiency judgment to recover this outstanding balance, provided they followed all legal procedures for repossession and sale.
In rare cases, if the lender sells your car for more than what you owe (including their expenses), the excess amount is called a “surplus.” In such situations, the lender might be legally obligated to return the surplus funds to you.
Reporting Repossession Problems
To gain a deeper understanding of your rights and the specific repossession regulations in your state, and to report any lender violations, contact your state attorney general or your local consumer protection agency. These resources can provide valuable guidance and assistance if you believe a lender has not followed proper procedures during the repossession of your vehicle.
By understanding the answer to “when will they repo your car?” and the entire repossession process, you can be better prepared to manage financial difficulties and protect your rights. Open communication with your lender and knowledge of your state’s laws are your strongest tools in navigating these challenging situations.
