An automobile can be repossessed under the Pennsylvania Motor Vehicle Sales Finance Act (MVSFA) when two conditions are met. First, the installment sales contract must specify that the seller has a security interest in the automobile. Second, the buyer must fail to make timely payments on the purchase agreement or must breach the contract in some other way that the contract specifically says would allow the seller to repossess the car.
Peaceful Repossession of an Automobile
The seller or the owner of the purchase contract (creditor) can have someone come and get the automobile in Pennsylvania only if that person can take it without any breach of the peace. That means the person doing the repossession cannot break into a garage or take the car over the purchaser’s objection if the purchaser is present.
If the creditor cannot take the automobile peacefully, it will have to go to court to get an order for repossession. It is a misdemeanor in Pennsylvania to breach the peace while repossessing a car.
Notice of Repossession Must Be Given
If the creditor takes the car peacefully, it must immediately give the purchaser a notice of repossession in person or by certified or registered mail. The notice must tell the purchaser if he has a right to reinstate the purchase contract, and if so the notice must include an itemized statement of how much the purchaser must pay to do so.
The notice must inform the purchaser that the car will be sold 15 days from the date of mailing the notice if the amount is not paid, and tell the purchaser where the car is being held and the person the purchaser should pay to reinstate the contract. The notice must also tell the purchaser that he has 30 days to claim any personal property that was in the car or it will be sold.
Reinstatement and Return of the Vehicle
The amounts for redeeming a contract are set by the MVSFA. If the purchaser pays the amount indicated in the notice of repossession to the person named within 15 days of the notice, the creditor must return the car within 10 days.
Sale of the Vehicle
If the purchaser has not reinstated the contract within 15 days of the notice of repossession, the creditor can sell the automobile in any way that is reasonable, in either a public or private sale. The creditor is required to give the purchaser reasonable notice of the time and place of the sale. Reasonable notice is generally considered 15 days.
The purchaser can buy the car at the sale. If the purchaser has paid less than 60 percent of the loan, the creditor can opt to keep the car in full satisfaction of the loan. To do this, the creditor has to give the purchaser written notice of an intention to retain the car. If the purchaser objects in writing within 21 days of the notice, the car must be sold.
Money from the Sale
Money from the sale of the car will be applied to the costs of repossessing and storing the car, the costs of the sale, reasonable attorney’s fees and the amount still due under the purchase contract – in that order. If there is still money owing on the purchase contract after all these expenses have been paid, the creditor can file a court action to get a judgment for the amount still due. This is called a deficiency judgment.