Cars

One day, Daniel's 5-year-old car broke down on his way to the office. He couldn't fix it and it seems that the car has finally reached its end. He called a tow truck to haul his car and a cab to take him to his workplace. At the office, Daniel decided to replace his old car with a new one. He then talked to a friend who works for a lending institution and, eventually, he agreed to make a loan to buy a new car. At first, Daniel was able to pay for the loan; however, there came a time when he was no longer able to keep up with the car payments and the creditor decided to reclaim the car.

This story partly explains what car repossession is. Car repossession takes place when a person falls behind on his/her car payments and the creditor decides to seize the vehicle. Put simply, when you buy a car on a hire purchase or loan agreement, the creditor or lender holds important rights on the vehicle. This means that the car you bought is not legally yours until payment for the car has been settled in full. So, if your payments are late or if you fail to keep up with the payments stated in the loan agreement, your creditor has the right to repossess your car.

Since state laws differ, there are some states that allow creditors to seize cars without giving notice to the owners. In a car repossession case, attempting to conceal your car to prevent the creditor from seizing it is a legal offense. At the same time, the law does not allow creditors to commit a breach of the peace in connection with the repossession. A creditor who breach the peace in reclaiming your car will be liable for damages.

Once a car has been repossessed, the creditor may keep the car or sell it at an auction. Repossessed cars are usually auctioned off at very low prices.