In some states, lenders may also be able to repossess a car if the borrower is in default on their loan, even if they are not behind on their payments. This can occur if the borrower has failed to meet other obligations under the loan agreement, such as maintaining insurance coverage or paying taxes on the vehicle.
If a lender is considering repossessing a car, they must first send the borrower a notice of default, which informs the borrower of their right to cure the default and prevent the repossession. The borrower then has a certain number of days, which is typically between 10 and 30 days, to cure the default. If the borrower does not cure the default, the lender can then repossess the car.
The repossession process can vary by state, but it typically involves the lender taking possession of the car and then selling it at a public auction. The proceeds from the sale are then used to pay off the loan balance and any other associated fees, such as storage and towing fees.
If the sale proceeds do not cover the loan balance, the borrower may be liable for the deficiency, which is the difference between the sale proceeds and the loan balance. The borrower may also be liable for any other associated costs, such as court costs and attorney fees.
