There is no consistency in the repossession laws in Canada because each province has its own laws. There are some provinces that allow a lender to repossess the vehicle and sue the debtor for damages, while others only allow the vehicle to be repossessed by a lender. For that reason, if you are late with your car payments and you live in Canada, check with an attorney who is familiar with the laws of your province.
Canadian Repossession Specifics
In Canada, there are two different types of repossession, voluntary and involuntary. An involuntary repossession occurs when a debtor is behind with his payments and refuses to cooperate with the lender to arrive at a resolution. The lender is free to use whatever means they wish within the law to reclaim the vehicle. A voluntary repossession by a lender occurs when a debtor willingly turns the vehicle back to the lender because he recognizes his difficulty in keeping current on the loan. A voluntary repossession will still reflect negatively on the person's credit report and it won't prevent the lender from losing money on the transaction. The lender will likely sue the creditor in most provinces for any losses.
Where the vehicle is physically located will determine the ease with which repossession can be accomplished. For example, there are numerous aboriginal reserves throughout Canada where someone repossessing a vehicle can be denied entry to the reserve, which can make it quite difficult to regain possession. Also, there are parts of the country that can be accessed only by boat. In the north, it's particularly difficult to repossess a vehicle during the winter. Because of these difficulties, it may be harder for citizens to gain financing when they live in those regions.
Canadian Auctions/Potential Suit Against You
When a lender repossesses a vehicle, they will almost immediately sell it at an auction and apply the proceeds to the debtor's loan. While there are auctions throughout Canada, one of the largest auctions in the country is the Toronto Auto Auction. When the lender applies the proceeds to your loan, he will note whether there is an additional balance due. Depending on the laws of that province, the lender may well sue you for the shortfall.
- Any Bad Credit: Vehicle Repossession in Canada
- Federal Trade Commission. "Vehicle Repossession." Accessed Sept. 30, 2020.
- Experian. "How Long Does It Take for a Repossession to Come off Your Credit?" Accessed Sept. 30, 2020.
- Nolo. "Deficiency Judgment." Accessed Sept. 30, 2020.
- Experian. "What is a Buy Here, Pay Here Dealership." Accessed Sept. 30, 2020.
Bill Herrfeldt specializes in finance, sports and the needs of retiring people, and has been published in the national edition of "Erickson Tribune," the "Washington Post" and the "Arizona Republic." He graduated from the University of Louisville.