Vehicle Repossession Laws - Who Do They Benefit?

Whenever you buy any type of vehicle on credit always remember that until the final payment is made on the vehicle the creditor continues to have certain rights in the vehicle. These rights are determined by the laws of the state and the contract that you signed with the lender as the seller. If you don’t make timely payments on the vehicle, vehicle repossession laws may come into play. Your negligence in payment will usually give the creditor the right to seize your vehicle without going to court and with no advance warning to you.

There are limitations to the creditor’s right to seize your vehicle. These limitations include but are not limited how the creditor may seize the vehicle and resell it to go towards your debt on the vehicle. If the creditor violates certain rules, vehicle repossession laws would make it possible for the creditor to lose other rights or even be indebted to you for damages. Each state has its own specific vehicle repossession laws; it would benefit the consumer to know what they are. The consumers can find out what the specific vehicle repossession laws of their state are by contacting a consumer protection agency or through private legal counsel.

According to vehicle repossession laws, the creditor has the legal right to repossess as soon as your loan is in default. To find out what would be classified as a default the consumer should refer back to the contract, but a late payment could be considered as default. If the creditor allowed the borrower or buyer to make late payments or change the date of payments it would change the terms of the original contract; this could be agreed upon through a conversation or in writing, it would be better for the consumer if it were in writing. If the creditor continuously accepted late payments without complaining that action might be perceived as a change in contract, even if there was no direct conversation on the subject.

At the point of default, vehicle repossession laws would allow the creditor to legally seize the vehicle at any point and time, without giving any notice. They even have the right to come on your property in some states. When seizing the vehicle the creditor has to be careful not to commit a “breach of the peace”, an example of it would be use of physical force or the use of threats. If the creditor does commit a breach of the peace when seizing the vehicle it may result in a penalty for them and/or compensation to the consumer for any damages. Vehicle repossession laws could also determine whether or not the creditor is able to collect a deficiency judgment, which is the difference between what is owed on the loan and the amount that is received when the vehicle is resold.