A vehicle loan is a secured loan where the vehicle serves as collateral. Therefore, if the vehicle owner defaults on the loan, the lender can repossess the vehicle and then sell it to at least partially make up for its losses. In Indiana, both the lender and the borrower have certain rights when it comes to repossession.
Banks' Rights to Payment
In Indiana, banks extending vehicle loans can repossess their collateral after one missed payment if their contracts contain acceleration provisions. An acceleration provision allows the trustee or bank to demand immediate payment of the remaining loan balance after just one late or missed payment. After repossession, banks typically sell their repossessed cars and file lawsuits against borrowers who defaulted on their loans for any remaining loan balance after the sale.
Legal Consumer Protections
In Indiana, consumers who paid less than $3,200 for their vehicles have legal protections against acceleration clauses. Creditors may not both sue borrowers and repossess their vehicles. Indiana requires banks to use only one of two available remedies: either file a lawsuit or repossess. Lenders who choose to repossess their ownership rights may not sue buyers for the remaining loan balance.
Identifying Information Required
Before repossession agencies repossess cars, agents must provide local law enforcement with repossession disclosures. Repossession agencies must disclose their identities, their intent to repossess, the vehicle owner's name and address and the address where the repossession will occur. Repossession agencies must provide this information before the repossession or within two hours after the repossession.
Peaceful Repossession Requirement
Under Indiana law, banks can freely repossess their vehicles after providing notice, but they must also comply with the state's order and peace laws. Banks cannot repossess their vehicles by damaging property, using force or violence or disturbing the public. Banks that violate the peaceful entry requirement may be liable for resulting damage costs.
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.
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