Alabama Car Repossession Rights

Vehicle repossessions occur when car buyers obtain vehicle loans to finance their car purchases. In exchange for the loan proceeds, banks retain their ownership rights to their security interests. When car buyers default on their loan agreements, banks typically have legal rights to reclaim their security interests or collateral after one missed payment. State laws determine what recourse buyers may have against repossession agencies hired to repossess vehicles for banks.

Alabama Consumer Credit Rights

Under Alabama law, creditors must provide consumers with two copies of all signed documents signed during the loan application process. Furthermore, loan documents must contain a consumer protection provision, in all capitalized letters, warning consumers to review their loan agreements prior to signing them.

Contractual Rights

Alabama allows credit agencies to insert acceleration agreements in their contracts providing them with the right to demand full payment of the remaining loan balance when borrowers default on their loan agreements. In addition to requiring car buyers to pay any remaining loan balances after banks sell their vehicles, the state's statutory code allows them to request repayment of repossession costs. However, when borrowers obtained original loans that were less than $1,000, then, under state law, they are not personally liable for any remaining deficiency after repossession and sale.

Repossession Notifications

Repossession agencies must notify car buyers of scheduled sales. Although some states provide consumers with a redemption period allowing them to cure their deficiencies in exchange for a return of their vehicles, Alabama does not. Debtors do not have rights of redemption, and as long as owners provide car buyers with notification of private or public sale, then they have satisfied their notification obligations.

Breach of Peace

Alabama law allows banks to reclaim their vehicles upon buyers' default on their loan obligations through judicial or nonjudicial methods. Judicial methods allow banks to obtain court orders prior to seizing their vehicles. Nonjudicial methods allow banks to hire third-party repossession agencies to reclaim vehicles on their behalf. As long as those repossession agencies do not violate public policy laws by using force or destroying property, then banks may engage them to repossess vehicles used as collateral for their loan proceeds.

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.