During periods of high unemployment, repossession agencies benefit from increased profits as increasing numbers of vehicle buyers default on their car loans or title loans. In Florida, title loan lenders and car loan lenders can repossess their collateral without providing notice to borrowers. However, they must comply with the state's redemption and licensure laws requiring them to obtain proper licensing allowing them to operate as title loan lenders or as vehicle finance lenders.
Voluntary Repossession
Voluntary repossessions occur when borrowers default on their loan obligations and voluntarily return their vehicles to lenders before lenders hire repossession agencies. According to the Florida Attorney General's Office, voluntarily returning a car to the lender may reduce the borrower's overall expenses. As a result, the total fees she may pay to redeem her vehicle will be less than if the lender involuntarily repossessed her vehicle.
Involuntary Repossession
Florida law allows lenders to involuntarily repossess their vehicles without providing advance warning and without first obtaining a legal judgment for repossession. However, the state's law restricts the method of repossession and the right of resale. Repossession agencies and creditors cannot "breach the peace" by engaging in violence or by threatening physical harm. If they resort to using these illegal activities, borrowers can sue them for damages.
Right of Resale
Florida law requires lenders to conduct "commercially reasonable" auctions or sales, and they must sell their vehicles at reasonable rates. Since Florida law also allows lenders to obtain a deficiency judgment for the deficiency amount remaining after the resale, lenders cannot deceptively underprice their vehicles. In other words, since a lender can sue the borrower for the difference between the sale amount and loan delinquency plus incidental costs, it must not unreasonably underprice its asking price. Lenders must return any profits made over the delinquency to borrowers within 30 days.
Consumer's Rights
A Florida consumer has the right to retrieve his personal belongings remaining in the vehicle, and the creditor is obligated to provide a written accounting of personal property found within the vehicle. Additionally, Florida law requires creditors to contact borrowers to notify them after repossessing their vehicles and providing them with advance notice of the place and time of public auction. For private sales, lenders must notify borrowers of their final date to pay their delinquencies before their vehicles are sold. Consumers have a right to demand sale of the vehicle if they are unable to exercise their rights of redemption. Consumers also have rights to ask courts to deny lenders' deficiency judgment suits if either lenders or their repossession agencies violated the state's peace laws.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
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