If you’re like most Americans, you rely on your car to get you where you need to go.  Commuting to work, taking the kids to school, or even picking up groceries would be impossible without the family truckster.  But in these uncertain economic times, it’s important to know about the penalties you could face if you fall behind on your car payments.  Depending on your state, if you miss as few as one payment, your vehicle could be repossessed!

Whenever you finance a new car purchase or agree to lease a vehicle, your creditor retains many important rights until you’ve paid off the car in full.  Although these vary significantly by state, the actual terms must be written into the contract that you sign at the time of purchase.  The most common right that a seller reserves is the ability to repossess the car if you fail to make payments in a timely fashion.  Also, there is no requirement that a seller must notify you before repossessing the vehicle, and repossession may occur as soon as you default on a single payment!  If your lender ever tries to tell you differently, or tries to make any changes to your contract, be sure that you get the changes in writing.

A lot of confusion arises when a vehicle is being repossessed by a third party, or someone other than the original creditor.  Much like the mortgage industry, a car note can be sold to another financial institution, and it’s not required that the current driver ever be notified.  This new creditor would have the same repossession rights as the original seller, at least until the car is paid off in full.

During a repossession, nearly every state permits the creditor to come onto your property to recover the vehicle.  However, they are generally required to do this peacefully, without any threat of force or breaching the peace.  If you find yourself confronted by a repo man, the safest course of action is to just turn over the keys once you’ve recovered your personal property from the vehicle.  Don’t feel shy about calling the police if you feel threatened or unsafe.  Even though this can be a very tense and stressful situation, do your best to stay calm and controlled.  Maintaining your composure will keep you out of any legal trouble, and the title company might be more inclined to sell the car back to you.

Surviving a repossession can be a very challenging task, and it’s normal to feel overwhelmed in this situation.  If you have any questions about your rights or responsibilities during a repossession, I recommend getting additional information for reference.  Good luck!