1. Default: The contract should clearly specify what constitutes a default, such as failing to make payments on time, violating the terms of the loan, or not maintaining insurance coverage.
2. Repossession Rights: The contract should indicate the dealership's right to repossess the vehicle if the buyer defaults. It should also state that the dealership may repossess the vehicle without prior notice or court order in certain situations, such as if the vehicle is in imminent danger of being damaged or stolen.
3. Notice of Repossession: The dealership must provide the buyer with written notice of repossession. The notice should include information about the default, the date and location of the repossession, and the buyer's rights and options.
4. Opportunity to Redeem: The dealership must give the buyer a chance to redeem the vehicle by paying the full amount owed on the loan, plus any fees and costs incurred. The contract should specify the time frame within which the buyer must redeem the vehicle, which is typically a few weeks or months.
5. Deficiency Judgment: If the buyer fails to redeem the vehicle, the dealership may seek a deficiency judgment for the outstanding balance on the loan. This means that the dealership can sue the buyer for the difference between the amount owed on the loan and the amount realized from the sale of the repossessed vehicle.
6. Disclosure of Rights: The contract should clearly disclose the buyer's rights and options in the repossession process, such as the right to receive notice of repossession, the opportunity to redeem the vehicle, and the prohibition against self-help repossession (i.e., the dealership cannot repossess the vehicle without following legal procedures).
It's important for buyers to carefully review and understand the repossession clause before signing a car purchase contract. If any information about repossession is missing or unclear, buyers should seek clarification from the dealership or consult with a legal advisor before proceeding.
