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If your car loan lender repossesses your vehicle, you're probably not entitled to any notice before the repossession. But in most states, the lender must provide you with specific notices after repossessing the car.
Car loan agreements usually specify that the lender can repossess your car when you're late making payments. Most states don't require car loan lenders to give debtors notice before repossessing vehicles. And courts and law enforcement don't usually monitor the repossession process as it's happening. So, you might not even know when or where the car will be repossessed.
But in at least one situation, you'll get notice ahead of time. In a few others, the lender might be limited in when it can repossess your car.
Notwithstanding whether the lender was supposed to give you notice before repossessing the car, it is still required to provide you with specific notices after the repossession.
In most states, the bank must notify you, in writing, of the following matters within a short time, usually five days after repossessing the car, but before it is sold or auctioned:
The lender must provide you written notice of your right of redemption and (or) right of reinstatement. It must tell you:
If you don't reinstate or redeem the car loan, the lender must also send you written notice if it intends to sell the vehicle. This notice may be combined with the first notice discussed above.
Usually, the notice must contain the following information:
If the car is sold, the lender must explain how the sale proceeds were applied against your debt. Most states allow the lender to apply the sale proceeds as follows, in this order:
If the sale amount doesn't cover the loan balance and costs. If the sale amount isn't sufficient to cover all of these items, then you owe what's called a "deficiency balance." The creditor must notify you of the amount of that deficiency. Typically, if you don't pay the deficiency, the creditor may take further action, such as suing you for the balance.
If the sale results in a surplus. If the creditor recovers more than you owed, the extra money is called a "surplus balance." The creditor must give you an accounting of the surplus and pay it to you, subject to one exception: If you have a co-signor and the loan agreement gives the co-signor rights to the excess, the creditor must pay the surplus to the co-signor. But surpluses aren't common in car repossession sales because a vehicle is typically worth much less than what's owed on the loan contract.
To find information about repossession laws and notices in your state, you can do some research on your own, contact your state attorney general's office or state consumer protection agency, or consult with a local attorney.