Ohio Repossession Laws

When borrowing money to purchase a vehicle, you get what is called a secured loan. Borrowers can finance their vehicles through the dealership's lending institution or through a third-party private banking institution. As a promise to repay their loan obligations, borrowers pledge the vehicle as collateral, providing lenders with the right to reclaim their property, or collateral, upon default. Ohio's repossession laws mandate notification to buyers from banks reclaiming their property.

No Prior Notice Required

Under Ohio law, banks and lenders do not have to provide car purchasers with notice prior to repossessing vehicles, if the purchasers defaulted on their loan agreements. Creditors can simply tow away vehicles used as collateral with no advance notice. However, lenders must comply with the state's laws allowing repossession only if there is no breach of peace. A breach of peace would be if the lender used physical violence, verbal threats of violence or damaged property during the repossession.

Rights to Reclaim or Redeem

Under Section 1309.623 of the Ohio Revised Code, borrowers who default on their loan agreements have a right to reclaim their collateral by offering a full tender. This full tender allowance provides debtors with rights of redemption if they pay the full delinquency plus any reasonable attorney's fees and repossession costs before the lender disposes of the property through a sale.

Subsequent Notice Necessary

Once a creditor repossesses a vehicle, it must provide the borrower with notice of repossession. Creditors who provide financing through "Buy Here/Pay Here" dealerships and creditors who provide the initial loans but subsequently assign them to third parties, must provide written notification of the repossession and loan default within five days of repossession. The written notice must provide each defaulting purchaser with the total amount in arrears, the steps necessary to reclaim ownership of the vehicle and any pending sale notices. Under Ohio's statutory code, borrowers who purchase vehicles and finance their purchases through vehicle loans are responsible for paying the entire loan obligations, even when lenders sell their vehicles. Buyers are responsible for any remaining loan obligations after the vehicle sale.

Notice of Sale

The notice of sale must contain the date, location, time and minimum sale or bid price for the vehicle. Lenders must also provide written notification to the purchaser of subsequent responsibility for any deficiency remaining after the sale. Lenders who provide independent financing are only required to comply with the notice of sale information.

Considerations

Since consumer protection laws can frequently change, you should not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.