Car Repossession Laws

Whether leased or finance, your creditor has important rights to possession of the vehicle in the event of a default. These rights are established in both the lending documents signed at the time of purchase and in the laws of the state in which you live. Most commonly, when a buyer fails to make timely payments on a vehicle, the lender will have a contractual and statutory right to take possession of the vehicle without going to court or giving you advance warning. This is what is known by most as a “repossession.” Your creditor may also be able to sell the right to take possession of the vehicle to a third party, called an assignee, who would then have the same right of repossession. It is also worth noting that in some jurisdictions, failing to carry adequate insurance may also be a trigger for repossession.

When Can a Creditor Repossess My Vehicle?

In many states, your creditor can take possession of your vehicle as soon as you default on your loan or lease. That could mean missing your first payment, failing to carry adequate insurance on the vehicle, or violating another condition of the lending documents. Your contract should state the specific circumstances that constitutes a default.

However, simply because the creditor is entitled does not mean that it will exercise its right in every situation. It is often possible to work with your creditor to change your payment date, roll payments to the end of your repayment term, reduce payment amounts during times of financial hardship, etc. If your creditor agrees to such a change, make sure they do it in writing. Most lenders are big organizations and it is possible for things to get lost in the shuffle. If your car gets repossessed despite an agreement, you will need the written proof to protect your interests in court.

What Happens to My Personal Property in the Vehicle?

The personal belongings inside of a vehicle belong to the owner and may be retrieved at a reasonable time and place from the creditor or its agents. Some states require the creditor to provide an inventory, but not all. If your creditor cannot account for possessions left in the vehicle, you may want to speak to an attorney and/or local law enforcement. You can find an attorney in your area able to help you with both your repossession and the missing property by visiting HG.org and using the attorney search functions.