State laws establish the rights consumers have when their default on their vehicle loans. As collateral for a loan, the borrower of a car loan gives her lender a right to repossess her vehicle if she defaults on her loan. In South Carolina, before a lender can repossess or reclaim its property, it must provide the borrower with advance notice and a right to cure her deficiency before it can proceed with repossession.
Title 37 of the South Carolina Code establishes when a lender can repossess a vehicle. Lenders must provide defaulting borrowers with a “Notice of Right to Cure” their loan defaults before proceeding with repossession. Under South Carolina law, a borrower is not in default of his loan obligations until he is at least 10 days behind in his payments. Additionally, the notice must give a borrower at least 20 days to cure his delinquency or default. However, federal credit unions do not have to provide this cure opportunity.
Right to Cure
South Carolina does not require lenders to provide car buyers with more than one “Notice of Right to Cure.” If a car buyer defaults on her loan more than once, the lender is not required to give her a subsequent notice. Thus, the lender can proceed with repossession without giving the borrower a right to cure after the second missed payment.
Lenders can repossess their vehicles by filing a self-help lawsuit after completing a “Claim and Delivery” notice or by towing defaulting borrowers’ vehicles. A lender can hire a repossession agency to conduct the repossession or the lender can conduct it. However, lenders and repossession agencies must comply with the existing South Carolina laws, which state that as long they abide by the state’s peace laws by not breaching the peace, they may repossess vehicles on the borrower’s private property or at their place of business if contracts provide them with these rights. Lenders have a right to sue car buyers for the remaining deficiency or the difference between the sale amount and the outstanding loan amount, if they sell repossessed vehicles.
In South Carolina, borrowers have a right of redemption to redeem their vehicles. Lenders must send borrowers with a written “Right to Redeem” notice after the repossession. The notice must outline the lender’s intentions to sell or auction the repossessed vehicle. Buyers may have up to two weeks to pay their delinquency and keep their vehicles. Under South Carolina law, borrowers who have paid at least 60 percent of their loans can demand a sale within 90 days of repossession. Any proceeds after the loan is paid must then be returned to the car buyer.
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.