Whether or not your car can be repossessed if you have the title depends on several factors, including state laws. The key factor is whether you have a clear title to the vehicle, because just possessing the title may not be enough. You may want to consult a local attorney for more specific information.
A lien holder has the right to take possession of your vehicle if your loan is in default due to late payments. A lien holder is the company that provided the funds for the loan. Based on the Uniform Commercial Code Article 9, the lien holder can take the vehicle once the default occurs without receiving court approval or going through the judicial process. The lien holder can also sell the vehicle once it's in its possession.
The title, or the pink slip, is a legal form that denotes ownership of the vehicle. The slip comes from the DMV and states your name as the legal owner of the car. When there is a loan outstanding on the car, the title will indicate the name and address of the lien holder on the title. Once a vehicle loan is paid in full, the lien holder should send you a release that states there is no lien on the vehicle and you own the vehicle with a clear title. The document should be filed with the DMV so ownership can be reflected on your registration.
Title and Repossession
If the title is in your name alone and the vehicle has not been used as collateral in any additional loan, then there cannot be a repossession of your vehicle. This is because for a repossession to occur, someone other than you must have a legal interest in the vehicle. If, for example, there is a co-owner on the title with you, then the co-owner must also not have used the car as collateral or placed any loans on the vehicle. If there are no loans by either of you on the vehicle, then your car cannot be repossessed.
Authorized Taking of Vehicle
Although your car cannot be repossessed when you have a clear title, the car may be taken by other legal means. A car can be taken as payment for a different debt where the creditor has obtained a judgment, or in a family law case where the court orders the vehicle transferred to the other spouse. A bankruptcy court can also order the vehicle sold and the proceeds used as part of the repayment procedure.
- Cornell Univeristy Law School: UCC: Uniform Commercial Code
- Federal Trade Commision; Vehicle Repossession: Understanding the Rules of the Road; November 2008
- Arizona Department of Transportation: Title Holding (for Lienholders)
- Dealertrack. "Electronic Lean & Title." Accessed Sept. 8, 2020.
- Direct Auto Insurance. "Car Titles." Accessed Sept. 8, 2020.
Angelique de la Morreaux began writing articles for various websites in 2010. Her focus is in the legal, small business, beauty, holiday, culture, food, drinks and automotive categories. Morreaux holds a Bachelor of Arts in social sciences from San Diego State University.