One such secured loan is for a car, and if you default on the payments when you have the lender enough reason to do so — they can repossess your vehicle. Usually repos occur at 60 days past due. Lenders, though have the option of responding sooner if they think a vehicle is at risk for damage or depreciation. Once you understand the nuances of this process, that is half the battle in hopefully navigating through any tough financial times.
Causes of Repossession
Failure to pay: While technically many lenders will consider a loan being in default after the first missed payment, repossession typically follows 90 days of non-payment regardless. Now, depending on the lender and a few state laws (some start repossession after only two months!).
Lender Notices — Lenders are legally required to send you a notice before repossessing your property, usually giving you either 30 days or a certain amount of time from the missed payment(s) in order for them to be paid off and/or alternative renderment. After this period if the matter is still not resolved, repossession can take place34.
Voluntary vs. Involuntary Repossession: While borrowers can choose to voluntarily return the vehicle, which might help lower some costs associated with involuntary repossession25. Lenders may look more kindly to this one.
Consequences of Repossession
Credit Effect: It will have a negative impact on your credit score, making it difficult you to get loans further. How long delinquent your account has been before repossession2
You are Still Financially Liable: If the car does not sell for enough to cover what is still owed on your loan after repossession, you will be responsible for making up that difference. These fees add up during the repossession process14!
Preventive Measures
Banks: If you think that you may have problems in delivering monthly payments on loans or lines of credit, contact your lender directly and discuss possible relief options (such as a new payment plan) with them35.
Wrapping Up: Next Steps If any doubt or questions arise after reading the repossession laws in TX, you need to clear your head with legal advice around what are my rights and where do I stand so that before having a resolution it can go apt.
Knowing these car repo laws will help borrowers be prepared and vigilant in keeping their assets as well as protecting themselves financially.
