Car repossession laws in Georgia give the lender that financed your vehicle a way to recoup its investment should you fail to pay off the loan. These laws also provide an avenue for lenders holding your car as collateral – such as title loan companies – to seize and sell the car if you default on the loan. Under Georgia law, lenders must also follow rules designed to protect the consumer when the lender physically repossesses your car.
But It’s My Car
Unless you pay cash, your rights of ownership are limited when you buy a car in Georgia. The entity financing your vehicle is fundamentally investing in your purchase. It holds title ownership until you meet the obligations of your loan. This is what gives the lender the right to take the car if you fail to repay as promised in the loan agreement, essentially defaulting on the loan.
The loan agreement you signed contains language describing what it means to default on the contract, usually due to lack of payment. Most lenders prefer to work with you should you fall behind on payments rather than take the vehicle back. Once the car is repossessed, the lender typically sells the vehicle to help offset losses on the loan. Cars generally depreciate quickly in overall value and often sell for much less than the balance due on the loan. It’s always best to communicate with your lender and discuss payment arrangements to try to avoid repossession. To protect your rights, make sure you obtain details of the payment agreement in writing.
The Repossession Process
Once you’ve defaulted, the lender can repossess the vehicle without judicial involvement and without notice to you. The company repossessing the car, usually a third-party vendor, can tow the vehicle from private or public property. For instance, the company can take the car from the parking structure at your job, the grocery store parking lot or your own driveway.
Georgia Code Section 11-9-503 notes that repossessions cannot, however, “breach the peace” in the process. This means the company cannot break into your garage to retrieve the vehicle. Also, it cannot move other vehicles out of the way in a private driveway or public parking situation to reach the car being repossessed. If unable to repossess your car without breaching the peace, the lender may then pursue judicial involvement to obtain its property.
Georgia Code Section 10-1-36 outlines the debtor’s options following car repossession. The lender must notify you of your rights to “redeem” the car within 10 days of repossession. Unless you’ve signed an agreement renouncing your rights, the lender has to give you the opportunity to pay off the remaining loan balance and reclaim the car. The total amount owed may include other reasonable expenses, such as the price the lender paid to have the car towed.
You can also demand the lender sell the car via public auction. The lender must attempt to receive a commercially reasonable price. Georgia law requires the lender to notify you of the date and time of the sale. The proceeds from the sale are then applied to your debt. If the lender cannot sell the car for the full amount owed, a deficiency remains. That is also the debtor’s responsibility.
For instance, if you owe $8,000 on the loan but the lender only received $6,000 from the sale, you owe the lender the remaining $2,000. However, if the lender fails to follow the required steps, you may not be responsible for the deficiency amount. An attorney can provide advice regarding your options at this point.