When you take out a loan to buy a car, the contract you sign gives the lender the right to repossess that car if the loan becomes delinquent. Nevertheless, under California law you have many rights, including the right to get your car back, if you bring your loan up-to-date and pay reasonable repossession and storage fees.
Lenders' Right to Repossess
Under California law, a lender can repossess a borrower's vehicle without prior notice if payments are even a single day late. The lender can also repossess the vehicle without prior notice if the borrower's auto insurance lapses -- again, by as little as one day. There is no grace period in either case.
Normally, there would be no reason for a lender to repossess a vehicle because the borrower's payment is day or two late. But it's useful to understand that the lender has this right and that there is no grace period because it also means that once your loan is delinquent the lender can repossess the car at any time. It's up to you to make past due payments before repossession occurs.
In California only two legal entities can repossess your car:
• The lender or the lender's employees
• Employees of a repossession agency that recovers collateral property, such as autos, boats, motorcycles or RVs.
The repossession agency must be licensed by the California Department of Consumer Affairs Bureau of Security and Investigative Services (BSIS). Each repossession agency employee must be individually registered with BSIS and carry a BSIS registration card on his person when working on a repossession. If your vehicle is being repossessed, you have the right to see this card when you ask for it. Employees of the lender, on the other hand, do not have to be licensed.
You can verify license information by calling the Department of Consumer Affairs' Consumer Information Center at (800) 952-5210 or online at the California Department of Consumer Affairs Bureau of Security and Investigative Services.
Restrictions on Repossession
California law gives repossession agents the right to enter private property -- your driveway, for instance -- to carry the repossession out. They may not, however, enter an enclosed area, such as a locked and fenced area or a garage, without permission from the legal owner of the property.
The repossession agent has no obligation to inform law enforcement of the repossession before it occurs, although some do in order to avoid a stolen vehicle report. Afterward, however, the repossession agency must notify the police or sheriff's office within one hour of repossession.
The agency must also notify you, but the time constraints are far more generous. It must notify you "by mail or in person" within 48 hours. If that 48 hour period includes a weekend or holiday the agency has 72 hours to notify you.
In practice, this means that a mailed notice of repossession might not reach you for as much as a week.
Your Recovery Rights
You have the right to recover your vehicle by paying off the loan entirely -- the process is called "redemption" -- and paying the repossession agency's fees. You can also recover the vehicle by bringing the loan current -- the process is called "reinstatement" -- although your loan agreement may limit those rights.
You can even halt the repossession process as it's occurring by paying both the lender and agency fees. California law, however, requires only that the repossession agency's fees be "reasonable." From your point of view, those fees may seem considerably higher than reasonable. Additionally, if they repossess your car with your private property in it, they can legally charge you similarly hefty fees for storing them.
If the repossession agency violates any California law related to repossession, you may have the right to recover your car without bringing the loan current. Basically, any action that constitutes a breach of peace is a violation, such as
• Threatening the use of force • Threatening arrest or to summon police for purposes of arrest • Forcing you to stop your car or forcibly removing you from the vehicle • Forcible entry to your garage or locked area
Things Not to Do
You can lose your right to reinstate your loan and recover your car if you
• Attempt to hide the car from the lender when the loan is delinquent • Engage in violence or threaten violence when the car is repossessed • Deliberately damage or threaten to damage the car • Have your vehicle repossessed by the same lender more than once in 12 months or more than twice over the course of the loan.