The Consequences of Voluntary Car Repossession in North Carolina

During a downturn economy, repossession agencies may see an increase in their business opportunities. Vehicle repossession agencies are paid to repossess vehicles for lenders when borrowers default on their vehicle loans. State laws establish the rights and duties between lenders, car buyers and vehicle repossession agencies. In North Carolina, car buyers may consider voluntarily *surrendering their vehicles before repossession agencies involuntarily seize them.

As legal consideration for the loan, a borrower pledges his car in exchange for the vehicle loan. Lenders retain ownership rights of their vehicles until borrowers fully repay their loan obligations. Generally, lenders can incorporate an acceleration clause in their loan contracts allowing them to repossess their property when borrowers default on the loan obligations. If a lender uses an acceleration clause, the borrower is responsible for fully repaying her loan after a single missed payment.

Notice and Location

Under North Carolina law, creditors are not legally required to provide car buyers with advance notice before they hire a repossession agency to seize its property. Furthermore, repossession agencies are not required to provide notice before they repossess borrowers’ vehicles. Repossession agencies have a right to repossess a car buyer’s vehicle at his home and on his property. As long as repossession agencies do not break North Carolina’s “peace laws” by breaching the peace, they may repossess their vehicles.

Creditors’ Rights

Banks have a legal right to demand that borrowers repay their delinquent loans. Repayment can include the cost of any outstanding legal fees, costs of repossession and the remaining loan amount, or the principal plus interest remaining on their loans. Since banks can accelerate the remaining payment due under the outstanding loan, voluntary repossessions often make financial sense for borrowers.

Voluntary Return

If a borrower voluntarily returns her vehicle, then she is voluntarily repossessing her own vehicle. If she voluntarily returns her car, then her lender will not be able to charge her for repossession costs and any incidental towing fees. Moreover, the borrower can personally retrieve his personal property from his vehicle before returning it. Although repossession agencies are legally obligated to return personal items, it can be a lengthy process.


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.