When you own a car, truck or other vehicle on credit, it is very important that you stay regular in your monthly payments with the loan company because the title is with the loan company and they reserve some important rights on the vehicle. They have these rights on your vehicle because you signed the agreement with them according to your state laws. If you fail to make timely payments, they can repossess your vehicle anytime without taking the matter to the court. In some states, the creditors don’t even need to send a warning letter to the customer before repossessing the vehicle.

While your creditors have some legal rights to repossess the vehicle, they do have some limitations also before taking it. In particular, the creditors have to follow certain laws on how to repossess the vehicle and how much it is to be resold in an auction. If the laws are violated, they will lose other rights against you, and pay for the damages. Some of the consumers’ rights are mentioned here. You may get more information from your state consumer protection agency or a private attorney.

• Seizing the vehicle:

The creditor has the right to seize your vehicle when you have defaulted in your monthly payments to them. Read the contract copy signed with the loan company to understand what constitutes a default as per their agreement. You must talk to the loan company if you are expecting a default and work out a prior arrangement. Make sure that you have all the arrangements done in writing for future records.

While seizing your vehicle, the creditor should not violate the breach of peace. Taking your car over your protest or using threats is illegal. They are not legally allowed to take your vehicle from a closed garage without your permission. They are not allowed to cause any damage to you or your property and if this is done, they have to compensate you for the damages done. It will result in breach of peace as per the laws of your state.

• Reselling the car:

Once the creditor has repossessed your vehicle, the creditor may keep the car for a certain period of time so that you can catch up the monthly payments and take it back. Or, he can sell the car in a public or a private auction. In any case, the creditor has to notify you in advance before the date of auction. You may want to exercise this right if the car is worth more than what you owe on it.

The auction of the repossessed vehicle must be done in a commercial reasonable manner. If the creditor tries to sell the car at a price below the fair market value, you are legally allowed to put a claim against the creditor for damages or a defense against a deficiency judgment.