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

Question

I'm less than two months behind on my car payments. But the bank repossessed my car today. They never gave me notice that they were going to take it. I've been paying on this vehicle 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 usually doesn't have to give you notice that it plans to take your vehicle. But in at least one situation, you'll get notice ahead of time.

When You Get Notice Before a Car Repossession: If You're in the Military

If you're in the military and have defaulted on a car loan, the Servicemembers Civil Relief Act (SCRA) provides you with special protections against the repossession of your car. The creditor usually has to go to court and get a court order before taking the car. You should get notice of that legal process. Though, some exceptions exist and there are a few additional details to consider.

Limitations on Car Repossessions

In a few other situations, the lender might be limited in when it can repossess your car.

Based on the Loan Agreement

Your loan agreement should describe what will happen if you fall behind on your payments and how far behind you have to be before the bank can repossess the vehicle. Loan agreements often allow creditors to repossess a car if the borrower is 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 time before a bank can declare you in default and take the car.

Based on Your Past Payment History

If the bank had a pattern of accepting late payments from you in the past, then it might have waived its right to repossess the car when you were late again. You can raise this past acceptance of late payments as a defense if the creditor sues you for a deficiency balance.

Notices After Car Repossession

Even if the bank wasn't required to give you notice before it repossessed the car, it still has to give you specific notices after the repossession.