Your car is the bank’s collateral for the car loan. If you stop making payments and default on the loan, the bank or lender may come at any time without notice and repossess your vehicle. Read on to learn about why lenders can do this, what some of the laws are around car repossessions, and how to stop it happening to you.

Why is your lender or bank legally allowed to take your car?
A security interest is something you give to your lender when signing the loan agreement. This says they can legally take the car without any kind of notice or arrangement at any time if you default on the loan. Usually a default means you haven’t been making payments or haven’t been making payments on time as scheduled.

How do car repos work?
The lender may take the car without notice as long as they don’t “breach the peace.” Breaching the peace means they cannot use force or threats to take the car from you. Under this law, they may not take the car from a closed garage or from an enclosed driveway. If a lender or a repo man breaches the peace during repossession you could file a lawsuit and potentially collect damages.

Deficiency Balance
If your car is repossessed and the lender sells it but cannot sell it for enough money to cover the remaining balance of the loan then they may sue you for the balance, called a deficiency balance.

Get your car back after repossession
If the lender hasn’t sold the car, you may be able to get it back.

You could:

• Redeem the car (buy it back from lender)
• Buy it back at auction
• File Bankruptcy to buy you time to catch up on payments or use bankruptcy laws to redeem the car, negotiate new terms, or surrender the vehicle without further responsibility.