If you default on a car loan, the bank or other financial lender has the right to repossess the vehicle. In other words, a creditor has the right take back possession of the vehicle and sell it to satisfy all or a portion of the debt. After repossession, a creditor has 90 to 180 days to resell or auction the car. The exact time limit varies by state.
Compulsory Sale
If a debtor has paid 60 percent or more of the cash price of the car at the time of repossession, the car must be sold at auction. This is known as a compulsory sale. Although how soon a creditor has to sell the car at auction varies by state, most states require the compulsory sale occur within 90 to 180 days of repossession.
Right to Redeem Repossessed Vehicle
Once a car has been repossessed, a debtor has a set limit of time where he has the right to redeem the vehicle before the creditor can sell it at auction. Although the amount of time the debtor has to redeem the car varies by state, generally a debtor has a minimum of 10 days. However, a debtor continues to have the right to redeem up until the car is put up for auction or otherwise disposed of.
Redemption
To redeem the repossessed vehicle and prevent resale, auction or disposal of the vehicle, the debtor must become current on the loan and pay all reasonable costs associated with repossessing the vehicle including reasonable attorneys fees, if any.
Creditor's Right to Repossession
Secured creditorshave the right to repossess that vehicle when the debtor defaults on his loan, unless other arrangements are specified in the sale or loan contract. A secured creditor is a creditor whose name appears on the title for the vehicle. Essentially, a secured creditor for a car is what a bank or mortgage lender is with respect to a house and the creditors right to foreclose for nonpayment.
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