State-mandated repossession laws give a lender the legal right to take your vehicle if you default on your loan agreement. In all states, failing to make payments provides legal grounds to start the auto repossession process. In some states, lapsed auto insurance also provides grounds. Understanding how the process works is vital, because although all states place limits on how a lender can take your vehicle, most allow this to occur without a court order and some do not require the lender to provide advance notice.
Contact an attorney or your state consumer protection agency, or read your purchase contract to see how your state defines the conditions under which repossession may occur. For example, your lender may have the right to take your vehicle if you miss even one payment. If you fall behind and remedy the situation by making payment arrangements, the Federal Trade Commission recommends that you get the agreement in writing. Although payment arrangements change the terms of the original contract, attorney Brandon A. Block cautions that some lenders will agree to a new payment plan, but then repossess the vehicle anyway. An oral agreement may be difficult to prove in court.
Lawful Repossession Procedures
Most states have “self-help” repossession laws that allow a lender to take your vehicle without a court order. However, laws vary on whether a lender must provide advance notice. For example, Wisconsin lenders must mail you a repossession notice 15 days before taking your vehicle. Regardless, repossession can take place at any time of the day or night. Your vehicle may be towed from your property or a public location.
State laws do not allow a repossession agent to breach the peace during repossession actions. Examples of “breach of the peace” conduct include:
- Taking the vehicle over your objection
- Using or threatening to use force to take the vehicle
- Threatening arrest or other involvement by law enforcement
- Forcing you to stop your vehicle while you’re driving
- Breaking into a closed or locked garage, or entering without explicit permission
- Damaging the vehicle
A breach of the peace constitutes wrongful repossession. Get professional legal advice if it occurs, as you may be entitled to compensatory damages or use it to avoid financial responsibility for paying a deficiency balance.
Repossession rights do not extend to any personal property inside your vehicle. After the repossession, a lender must provide instructions about to how retrieve personal items. In addition, most states require a lender to mail you a default notice explaining why your vehicle was repossessed and what you must do to get it back. For example, Ohio lenders must send two notices within five days of repossession: one explaining the reasons for repossession and the other explaining how to get your vehicle back.
- The Lectric Law Library
- Federal Trade Commission Consumer Information: Vehicle Repossession
- Law Offices of Brandon A. Block: Car Repossessions
- Wisconsin Lawyer: Wisconsin's New Automobile Repossession Law: Creditors in the Driver's Seat
- Ohio State Bar Association: Know Your Repossession Rights
- Federal Trade Commission. "Vehicle Repossession." Accessed April 7, 2020.
- Consumer Financial Protection Bureau. "If I Can’t Make My Auto Loan Payments, Will My Vehicle Be Repossessed?" Accessed April 7, 2020.
- Commonwealth of Massachusetts. "What to Know if Your Car Is Repossessed." Accessed April 7, 2020.
- Los Angeles County Consumer & Business Affairs. "Vehicle Repossessions." Accessed April 7, 2020.
- Experian. "How Long Does It Take for a Repossession to Come off Your Credit?" Accessed April 7, 2020.
- Association of the Bar of the City of New York. "Repossession." Accessed April 7, 2020.
- Experian. "Collection Accounts for Repossessed Car in Credit Report." Accessed April 7, 2020.
- Consumer Financial Protection Bureau. "My Car Has Been Repossessed, and I Was Told It Will Be Sold. What Can I Do?" Accessed April 7, 2020.
- Justia. "Vehicle Repossessions and Bankruptcy." Accessed April 7, 2020.
- Consumer Financial Protection Bureau. "What Happens If I Left Some of My Personal Possessions in My Vehicle When It Was Repossessed?" Accessed April 7, 2020.
- Georgia Consumer Protection Division. "Repo Company Charging to Return Belongings Left in Vehicle." Accessed April 7, 2020.
Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.