Vehicle or more specifically car repossession can occur anytime that you, as the person that is the process of purchasing the car through a loan option, default on a payment or series of payments, depending on the laws of your state and the terms of your vehicle purchase. Car repossession laws vary from state to state with some requiring the creditor to provide notice that you are in default of the loan and subject to repossession of the vehicle, and others not requiring any notice at all.
Knowing your state's car repossession laws is important so you can be aware of what you need to do to protect yourself. Obviously the most important fact is to always make your loan payments on schedule to prevent car repossession. If you can't make your car loan and you know in advance, talking to your lender may provide alternate options such as making a partial payment or making additional payments to catch up to your repayment schedule. Any type of vehicle repossession will result in a dramatic decrease in your credit score that could serious affect your ability to obtain any type of loan in the future.
If you are concerned about having your car repossessed the first step is to talk to an attorney. The lawyer will be able to advise you specifically on what you can do and how you need to do it to protect yourself and your credit. In some cases the car repossession can be done voluntarily and an arrangement made to sell the vehicle and then pay the difference in the outstanding amount and the sale price. This can sometimes be used as an option to prevent it from reflecting on your credit report.
During the vehicle seizure or car repossession the repossession company and its agents have to follow the law or the repossession can be overturned and you may even be able to file for damages. In all states the repo agents cannot use physical force against an owner and in some states they cannot go into a locked garage or other building to take the vehicle. Coming onto your property, especially if you have a locked gate may also violate some state laws. The vehicle can be repossessed in a public space or on the street in front of your yard or in your driveway if there is no locked gate between the driveway and the street. In some states if you refuse to surrender the vehicle and the repo company attempts to take it anyway they may be breaching the peace, which can result your legal right to filing a suit against the company.
Generally vehicle owners don't simply choose to stop making payments on their cars so that they will be repossessed. Typically what happens is that there is some type of a change in the individual's financial situation that prevents even the most financially responsible consumer from being unable to make their car payment. Some of the issues that can lead to a missed payment or payments include:
• Illness or death in the family
• Loss of employment
• Disability
• Personal tragedy
Thankfully most lenders are more than willing to work with consumers and borrowers through problem times, however all consumers that are behind in payments or are going to miss payments on their vehicle should be aware of car repossession laws in their state. Car repossession laws have to be followed by the repossession company or you, as the consumer, may be able to go to court to sue for damages or to limit or eliminate any deficiency payment that the lender may be requiring.
The first concept that consumers should be aware of is that under car repossession laws until the final payment is made on the vehicle, often called the title transfer, the consumer is not the owner of the car. The owner of the loan, typically the dealership, has the right of ownership and the consumer has the right of possession. This means that the owner (dealership) has a right to take back the vehicle if the loan agreement is not honored. It really doesn't matter if you default on the first or last payment, until the loan is paid as per the signed agreement, the lien or loan holder can repossess the vehicle for non-payment. The number of payments that must be missed to start the repossession should be clearly stated in your loan or financing agreement.
Another key concept is that each state has their own car repossession laws and not all states are the same. In some cases the dealership must go to court and get a judgment to proceed with repossession and the owner is notified of the hearing and can appear in court on his or her behalf. In addition the owner is notified of the pending repossession. In other states there is no judgment needed, nor is the creditor required to let the consumer know that they are repossessing the vehicle. Understanding what your state requires with regards to notification is an important part of the car repossession laws.
Once the vehicle is seized it can either be sold at auction or retained by the creditor and evaluated at current market value. Car repossession laws prohibit the creditor from selling the car at a below fair market value or giving you less credit that what the car is worth as per industry accepted prices. If this happens the consumer can take the dealership to court in order to have the deficiency payment lowered or even completely removed by the judge or through a hearing.
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