If a borrower defaults on his car loan, most state laws allow the lender to repossess the car without any warning, says Nolo. Borrowers with a poor credit history are generally considered flight risks by both banks and may have as little as 10 days after the default of a loan before the lender comes for the car, warns Edmunds.com.Continue Reading
When a repossession agent is sent to repossess a car, the agent may watch the home of the borrower and follow the car when it leaves, towing it to an impound yard once left unattended, explains Edmunds.com. The lender has the right to sell the car after repossession, but the borrower may have the ability to get his car back, explains Nolo. To do this, borrowers have a few remedies, including reinstating the loan or buying the car back at auction.
Repossession of a vehicle does not remove the obligation to repay the loan, notes Nolo. The finance company also has the right to sue for the remaining balance even after the car was repossessed. When a car is financed by a lender, that lender has a security interest in the vehicle. As soon as the borrower defaults on the loan, most state laws gives lenders legal access to the vehicle. Many situations constitute a default, but the most common reasons are no car insurance and failure to make timely payments on the loan.Learn more about Credit & Lending