What you need to know about vehicle repossession laws in California.
In California, if you default on your car loan, you aren't entitled to notice before a repossession agent takes your car. As soon as you miss a car payment, the lender can arrange to have your car repossessed—the lender doesn't need to get your permission or to tell you in advance. The lender may also repossess the car if you breach the loan agreement in some other way, like by letting the insurance lapse. (Cal. Com. Code § 9609).
But after the repossession, you're entitled to several written notices, including one about how you can get the vehicle back. Also, the repossession agent can't do certain things when taking your car.
What a Repossession Agent May Do in California
In California, the lender (or an employee of the repossession agency) can take a vehicle from any publicly accessible place, including your unsecured driveway, the street, a parking lot, or another publicly accessible area. But it can't enter a private building or secured area, such as your locked garage unless it gets permission from you or another person in lawful control of the property. So, a repossessor may enter a parking lot, garage, or gated community that's open to the public, even if privately owned, to repossess a vehicle.
Also, a repossession agent can repossess your vehicle whether or not you're present.
What a Repossession Agent Can't Do in California
A repossession agent can't, however, breach the peace by threatening you, using violence, or damaging your personal property, among other things, when taking the car. (Cal. Com. Code § 9609).
In most cases, once the car is repossessed, the lender will sell it either at auction or through a private sale, often to a used-car dealer.
Notices You'll Get
Under California law, the lender has to send you the following notices after repossessing your car:
- a notice about the seizure
- an inventory of your personal effects, and
- a notice about your right to get the back through reinstatement or redemption.
Deficiency After Car Repossession
Once the lender repossesses your car, it can sell the vehicle to recoup some of the money you owe. If the sale proceeds aren't enough to cover your unpaid loan balance plus the lender's costs, you'll owe the difference—called a "deficiency."
Example. When Tyler moved to Los Angeles, he bought a used car for $15,000. He financed the purchase through a bank loan. Later on, though, Tyler lost his job and defaulted on the car payments. He still owed $12,000 when the lender repossessed it. The lender incurred costs totaling $1,000 to repossess the car and sell it. Because cars depreciate quickly and because repossession sales don't bring in top dollar, the car sold for just $8,000. The deficiency in this scenario is $5,000.
Here's the calculation: $12,000 (loan balance) + $1,000 (lender's costs in repossessing and selling the car) - $8,000 (sale price) = $5,000 (amount of the deficiency). So, Tyler still owes the bank $5,000.
The lender might then send letters, make collection calls, or file a lawsuit to recover the deficiency.
Talk to an Attorney
If you think your car-loan lender didn't comply with California law when repossessing your vehicle and you want the vehicle back, talk to a lawyer right away. A lawyer can help you raise the issue either directly to the lender or help you file a lawsuit in court.
Also, you might want to consider talking to a lawyer if the lender sues you for a deficiency. T
