When a vehicle is purchased on credit, the creditor retains certain rights to the vehicle until the final payment is made. These rights are spelled out in the contract between the lender and borrower. If the borrower defaults on payment of the vehicle, the creditor may have the right to repossess the vehicle without going to court, and without notification.
A sales contract between borrower and lender will include the amount of each payment and the date payment is due. If the contract states that the creditor retains a security interest in the vehicle, the creditor is within his rights to repossess for nonpayment. The creditor must also take steps to "perfect the lien" when the vehicle is titled, thereby asserting his claim to the vehicle over any other creditors. If the creditor has properly perfected the lien, and the borrower misses any payment, then the creditor is legally permitted to start the repossession process.
Before repossessing an automobile, a lender may send the borrower written notice of the amount due and the deadline for payment. If this notice is sent, it must be hand delivered or sent via certified mail at least 11 days before the payment deadline. However, the creditor is not required to send this notice. According to Connecticut Code: 36a-785, if the creditor chooses not to send a notice, then the borrower must be notified of the repossession by hand delivery or certified mail no later than three days after the repossession. This notice must inform the borrower of his right to redeem the car. If the lender fails to send this notice, no repossession or storage fees may be charged.
If the borrower received no written notice before repossession, he has 15 days from the date of the repossession to redeem the automobile by paying the balance due. The borrower may also be liable for repossession and storage fees. If written notice was given prior to the repossession, and the consumer failed to meet the terms of the notice, then the consumer may not redeem the automobile.
Under the Article 9 of the Uniform Commercial Code, once a car buyer is found to be in default of contract, a creditor may enter the buyer's property to repossess the car, as long as the repossession is done peacefully. The local police must be notified immediately after the repossession.
If the consumer fails to remit the past-due payments and required fees within the 15-day period, then the lender must sell the automobile within six months. If the car is to be sold at public auction, the consumer must be told when and where the auction will take place. No later than 30 days after the sale, the creditor must inform the lender of the sale price of the vehicle. The lender must credit this amount to the borrower's debt, minus any charges incurred during the sale. This is credited to the entire unpaid balance, as the borrower will still need to rectify this debt.