Car Repossession: What the Lender Can and Cannot Do

When a lender can take your car

Your contract defines default. A missed payment is the usual trigger, but contracts can also count a lapse in required insurance or moving the car out of state without permission. Once you are in default, many states let the lender repossess at any time, without telling you first and without going to court.

Some states require more. Several give borrowers a right to cure: a way to keep the car by paying only the missed payments and allowed costs, either through a written notice and a set number of days to catch up before the lender may act, or by reinstating the loan after a repossession. The state laws map shows where that protection exists, and each state page lists the details.

What a repo agent may not do

The lender or its agent may take the car from a driveway, a parking lot or the street, but it may not breach the peace. What counts depends on state law and court decisions, so the list below is a guide, not a rule for every state.

• Using or threatening physical force.
• Breaking into a locked or closed garage, or another closed space, without your permission.
• Continuing after you object face to face, in many states.
• Bringing police along to pressure you without a court order, in some states.

Remote starter-interrupt devices, sometimes called kill switches, may count as a repossession or as a breach of the peace depending on your contract and your state.

After the car is taken

1. 1 Ask for your belongings. The lender may not keep or sell personal items found in the car; some states require it to tell you what it found and how to collect it.
2. 2 Read every notice. Most states require a written notice before the car is sold, saying whether it will go to a public auction or a private sale and when.
3. 3 Redeem if you can. Until the sale, you can usually get the car back by paying the full balance plus repossession, storage and other costs allowed by the contract.
4. 4 Ask about reinstatement. Some states let you reinstate the loan by paying only the missed payments and the lender's costs.
5. 5 Check the sale math. After the sale, the lender must apply the price to your debt; a shortfall is a deficiency and a surplus belongs to you.

Auction prices are often well below what the car would fetch in a private sale, which is why the gap can be large. In most states the lender must sell in a commercially reasonable way and send you an explanation of how it reached the deficiency. A sale that ignored the required notice, or a figure that includes charges the contract does not allow, may reduce or cancel what you owe. Keep every letter the lender sends, the date and place of the sale, and your own record of payments; you will need them to question the numbers or to show a lawyer or legal aid office.

Our guide to the deficiency balance explains how that figure is calculated and when you can challenge it.

How to stop a repossession before it happens

If you are already behind, start with what to do when you miss a car payment.

How a repossession affects your credit

The late payments, the repossession and any unpaid deficiency can all appear on your credit reports, and negative items generally stay for seven years. A voluntary surrender is reported in a similar way. If a collector later contacts you about the deficiency, you have rights under the Fair Debt Collection Practices Act, explained by our sister site Lendmira in debt collectors and your rights.

Where to complain

If you think the lender broke your state's rules, contact your state attorney general or the agency that licenses auto lenders in your state; each state page names it. The Consumer Financial Protection Bureau takes complaints about any auto lender or servicer. Describe what happened in date order, attach the notices you received, and say what you want: the car back, a corrected deficiency figure, or your belongings returned. A legal aid office can tell you whether the lender's mistakes give you a claim of your own.

Questions people ask