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.
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.
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.
- North Carolina General Statutes: Chapter 25A Retail Installment Sales Act
- North Carolina Department of Justice: Car Repossession
- 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.
Jill Stimson has worked in various property management positions in Maryland and Delaware. Stimson worked for the top three property management companies in the commercial industry and focuses her career on property building logistics and tenant relationships. She holds a Juris Doctor and a Bachelor of Science in psychology.