The bank repossessed my car without giving me notice. Is that legal?

In most cases, your car loan lender doesn't have to give you notice before it repossesses your car.

Question

I'm less than two months behind on my car payments. However, the bank repossessed my car today. They never gave me notice that they were going to take the car. I've been paying on this car for over three years. Is that legal?

Answer

As a general rule, yes. Most car loan agreements specify that the lender can repossess your car when you're late making payments. The lender doesn't have to give you notice that it plans to take your car. (To learn more about how the repossession process works, see How Motor Vehicles Are Repossessed.)

However, in at least one situation, you'll get notice ahead of time. (This applies to those in the military—see below.) In a few other situations, the lender might be limited in when it can repossess your car.

  • The loan agreement. Your loan agreement should spell out what happens if you fall behind on payments and how far behind you have to be before the bank can repossess the car. Many loan agreements let creditors repossess a car if you're just a month late on payments. You might even be one payment away from paying off the loan, but the bank can still repossess if you're late. Other agreements will give you more wiggle room with payments before a bank can declare you in default and repossess the car.
  • Your past payment history. If the bank had a pattern of previously accepting late payments from you, then it might have waived its right to repossess if you were late again. That might not immediately stop the bank from repossessing the car, but you can raise this as a defense if the creditor sues you for a deficiency balance.

  • You're in the military. If you're in the military, the creditor usually must get a court order before it can repossess the car. You should get notice of that legal process. There are some exceptions and additional details. (See Car Repossession: Special Protections for Military Servicemembers Under Federal Law for more information.)

Notwithstanding whether the bank was supposed to give you notice before it repossessed the car, it is still required to give you certain notices after the repossession. To learn more, see Required Notices in Car Repossessions.

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