Repossession of Your Car
Authored By: Legal Aid Services of Oklahoma, Inc.
Can the loan company repossess my car even if I am only one payment behind?
Yes, when you get a loan for a car you give the loan company a "secured interest" in your car. That means the loan company has an interest in your car until the loan is paid off. If you default on your loan by failing to pay as agreed, even if it is only one payment, the loan company can take your car back. If you are even one day late, it can be considered a default and your loan company can come and get the car. However, most car loan contracts provide for a grace period for late payments.
What if I mailed the check to catch up my payments and they came and got my car anyway?
What you do in this case depends on whether your loan company received the payment before the car was repossessed. If it did not receive the payment prior to repossessing your car, you have a couple of options. First, you can try to negotiate with the company to get your car back. In addition to catching up the payments, you will also have to pay towing and storage fees that are owed to the company who did the actual repossession. If negotiating does not work, you also have the "right to redeem" your debt. This means that you have the right to pay the entire amount of the debt owed on your car, as well as any other fees and costs resulting from the repossession-then you'll get your car back. This option may be difficult to use, especially if you still owe a large amount on your loan.
If the loan company received your payment prior to repossessing your vehicle and you have proof, such as a receipt, you may have a claim for wrongful repossession and you should contact an attorney immediately.
Can my car be repossessed in the middle of the night?
A loan company or its agent can repossess your car at any time, as long as they do not breach the peace. That means that the loan company can do almost anything short of breaking and entering or threatening you with force to repossess your car. Repossession usually occurs in the middle of the night because it prevents a breach of the peace and ensures that your car will be at your home.
What if I have personal belongings that were in the car when it was taken back?
The best way to get your belongings back is to immediately contact the company that repossessed the car. If you do not know who it was, contact your loan company. Sometimes the towing company will hold your belongings until the towing fee is paid, in which case there is not much you can do, except pay the fees. Also, there is no way for you to prove what belongings you had in your car, so it may be difficult for you to get everything back. The best way to protect yourself is PREVENTION. If you are in danger of having your car repossessed, it is a good idea to remove all of your belongings each time you exit the car. It is also important to NEVER leave important papers in your car, such as receipts or the title to your car.
What happens to my car after they repossess it?
The loan company has a right to sell or lease your car after it has been repossessed. It must notify you of the time and place of the sale. The money that the loan company receives from the sale is applied to your outstanding debt with the loan company, but the loan company has a right to pay its expenses first. That means that any money that is made will go to pay the expenses related to the repossession and sale of your car BEFORE it is applied to your debt. In addition, the loan company can hold you responsible for any deliberate damage done to the car. As a result, the sale of the car may not make enough money to pay off your loan. This is called a "loan deficiency."
What is a loan deficiency?
A loan deficiency is the amount you still owe to the loan company, even after your car is sold. For example, if you owed $5000 on your car note before they repossessed the car and the amount applied to your debt after the car was sold was $2000, you would still owe $3000 to the loan company. Most loan companies will sue you in court to get a judgment for the amount of the loan deficiency. As a result, attorney's fees and legal costs could be added to it. You are still responsible to the loan company for this amount, even though you no longer have the car. If the loan company gets a judgment against you for the loan deficiency, it can collect the judgment by garnishing your wages or checking account or by placing a lien on any property that you own.