Who really owns a newly purchased car in the state of Georgia? While the buyer has some rights, the lien holder – the company that financed the purchase – has more. Unless and until that vehicle is paid off in full, getting behind in car payments in Georgia can result in having the vehicle repossessed and sold. For anyone who owns a vehicle in Georgia, it's important to understand how little it takes to fall into a default that can trigger a car repossession.
Georgia Lien Holders
Most people who take out a mortgage to buy a house in Georgia understand that defaulting on their monthly mortgage payments can result in foreclosure on their home. But there are protections for those who live in the houses they own, and a foreclosure sale, though entirely possible, is a slow-moving beast, giving the homeowner months to attempt to remedy matters.
On the other hand, defaulting on an auto loan in Georgia is a much quicker process. Banks or other businesses who make car loans take back a lien on the vehicle, essentially remaining the owners of the cars while the loan is outstanding. In fact, they usually retain the certificate of title until the final payment is made. These rights are set out in the sales contract and in state statutes.
If the buyer defaults, the lien holder does not have to send notice after notice informing them of the fact, nor are they under the legal obligation to find a solution to the issue. In fact, if a Georgia resident fails to make even one car payment on time, the lien holder has the right to repossess the vehicle without going to court or first discussing the matter with the borrower. This is equally true for leased vehicles if the person leasing the car fails to make timely payments.
Vehicle Repossession Laws in Georgia
Put in the simplest terms, repossession happens when the lender sends a tow truck to move the vehicle from the buyer's property to the lender's lot. The bank or lender has the right to do this when the borrower defaults on any of their responsibilities under the sale contract. Most Georgia repossessions involve failure to make timely payments.
Exactly what is the lien holder permitted to do if the borrower is late with payments? They can send someone over to take possession of the vehicle and move it to their own lot or garage. However, there are certain actions they are not permitted to take in this process:
- Georgia vehicle repossession people do not have the right to go into a borrower's home or garage to recover the car.
- Georgia repossession agents are not permitted to use any type of violence to repossess the vehicles: no doors bashed or fences broken.
- There must not be a "breach of the peace" in the repossession. That usually means that when the buyer is present and objects or attempts to prevent repossession, the agent must withdraw and try again later.
- Repossessions in Georgia are illegal when an agent of the lender tricks the buyer into bringing the car into an auto shop, then takes the car back after the buyer has left. However, if the buyer brings it to the shop on their own, the repo person can repossess the vehicle there.
Notice of Repossession
A lender has no obligation to notify the buyer of the vehicle that they are planning repossession, nor do they have to check in with the buyer when they take the car. However, Georgia law mandates that the lien holder send the buyer notice of the repossession within 10 days of the day it occurs by registered mail, certified mail or statutory overnight delivery.
The notice should advise the buyer that they have the right to get their vehicle back if they pay off the loan. That is, they must pay the entire outstanding loan amount in full, as well as any fees involved, not just the overdue loan payments. The fees can include penalties, interest, towing fees, storage fees and even attorney fees in Georgia. If a buyer manages to pay the sum total of these expenses before the creditor sells the car or enters into a contract to sell it, they have the right to reclaim the vehicle.
Borrower's Personal Possessions
If a borrower left personal belongings in the motor vehicle, they have a 30-day window in which to retrieve them. They may be asked to pay storage fees for those items. The repossession agent should contact the buyer to set up an appointment to retrieve the personal property.
Creditor's Right to Keep the Vehicle
Sometimes, the car creditor can simply keep the repossessed vehicle to satisfy the debt. Under Georgia law, the creditor has this right if, at the time of repossession, a borrower has paid less than 60 percent of the car loan. If the creditor wishes to do this, their intention must be included in the notice to the borrower.
The borrower may object to this procedure. If they do so within 21 days of the time they get notice of the creditor's intention, the creditor cannot keep the vehicle but must resell it at auction. All auction sales of repossessed vehicles must be handled in a commercially reasonable manner. The time, manner of sale and place of sale must all be reasonably calculated to get market-value bids.
Right to Sue Borrower for More
If the lender does not get enough money by selling the vehicle at auction, the difference is called the deficiency amount. Georgia repossession laws allow the lender to collect the deficiency from the buyer. But they only have this right if they sent out written notice of the repossession and deadlines for payment within 10 days of the repossession, as Georgia law requires.
Georgia repossession laws also protect the borrower from an unreasonable sales price. This means that if the repossessed vehicle is sold well under market value, the borrower may not be held liable for the remainder of the loan.
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.