If you let the lender keep your car and they resell it are still responsible for remaining balance?

If you surrender a car to the lender and they resell it through a repossession sale (or private sale) and there is a balance left over, you could be legally liable for the remaining amount. This difference between what the car sells for and the total debt—including the car loan balance, accrued interest, repossession costs and any other related fees—is called a deficiency balance. Whether or not you are responsible for a deficiency balance varies and is determined by the laws in your state and the terms of your car loan contract.

Deficiency balances are more common in certain states, known as "deficiency judgment" states. In a deficiency judgment state, the lender can sue you for the deficiency balance if they are unable to sell the car for enough to cover the full debt. Some deficiency judgment states include:

- California

- Florida

- Illinois

- New Jersey

- New York

- Texas

If you live in a deficiency non-judgment state, the lender cannot sue you for the deficiency balance, even if the car sells for less than the amount you owe on the loan. Some non-judgment states include:

- Arizona

- Georgia

- Maryland

- Minnesota

- Oregon

- Washington