In California, if you default on your car loan—that is, fail to make the payments or violate the loan contract in some other way—you aren't entitled to notice before a repo agent takes your car. But after the repossession, you're entitled to several written notices, including one about how you can get the vehicle back. Also, the repossession agent can't do certain things when taking your car.
Read on to learn how car repossessions in California work, what kinds of notices you'll get, and whether you might still owe money to the lender following the repossession.
As soon as you miss a car payment in California, the lender can arrange to have your car repossessed. The lender may also repossess the car if you breach the loan agreement in some other way, like by letting the insurance lapse. (Cal. Com. Code § 9609).
Once you default, the car repossession company can simply take your car—it doesn't need your permission or to tell you in advance.
In California, the lender (or an employee of the repossession agency) can take the vehicle from any publicly accessible place, including your unsecured driveway, the street, a parking lot, or another publicly accessible area, but it can't enter a private building or secured area, such as your locked garage—unless it gets permission from you or another person in lawful control of the property. So, a repossessor may enter a parking lot, garage, or gated community that's open to the public, even if privately owned, to repossess a vehicle.
Also, a repossession agent can repossess your vehicle whether or not you're present.
A repossession agent can't, however, breach the peace by threatening you, using violence, or damaging your personal property, among other things, when taking the car. (Cal. Com. Code § 9609). (To learn more about what a repossession agent generally can and can't do when repossessing your car, see How Motor Vehicles Are Repossessed.)
In most cases, once the car is repossessed, the lender will sell it either at auction or through a private sale, often to a used car dealer.
Under California law, the lender has to send you the following notices after repossessing your car:
To get details about each of these notices, including what information they'll contain and time frames for delivery, see Notices You'll Get in a California Car Repossession.
Once the lender repossesses your car, it can sell the vehicle to recoup some of the money you owe. If the sale proceeds aren't enough to cover your unpaid loan balance plus the lender's costs, you'll owe the difference—called the deficiency. (Learn more about deficiency balances after car repossession.)
Example. When Tyler moved to Los Angeles, he bought a used car for $15,000. He financed the purchase through a bank loan. Soon after, however, Tyler lost his job and defaulted on the car payments. He still owed $12,000 when the bank repossessed it. The bank incurred costs totaling $1,000 to repossess the car and sell it. Because cars depreciate quickly and because repossession sales don't bring in top dollar, the car sold for just $8,000. The deficiency in this scenario is $5,000. Here's the calculation: $12,000 (loan balance) + $1,000 (lender's costs in repossessing and selling the car) - $8,000 (sale price) = $5,000 (amount of the deficiency). So, Tyler still owes the bank $5,000.
The lender might then send letters, make collection calls, or file a lawsuit to recover the deficiency. (To learn about possible defenses to a deficiency lawsuit, see Can a Car Lender Collect a Deficiency After Repo?)
If you think the lender didn't comply with California law when repossessing your vehicle and you want the vehicle back, talk to a lawyer right away. A lawyer can help you raise the issue either directly to the lender or help you file a lawsuit in court.
Also, you might want to consider talking to a lawyer if the lender sues you for a deficiency. (To find out when hiring an attorney might be a good idea—and when you might not need one— in a deficiency suit, read Should I Hire a Lawyer if My Car Lender Sues Me After Repossessing My Car?)