Many people cannot reasonably afford to purchase a vehicle in cash. Even if you have enough in savings to cover the cost, that means leaving with no emergency funds, which is never a good situation.
Quite a few households finance their vehicle purchases. Buying a vehicle with a loan means that you might only be one or two missed payments away from losing your vehicle. Whether you received financing from an outside business or the dealership where you made the purchase, the vehicle is collateral for the loan, which means you will lose the vehicle if you default on the financing.
Will you receive notice before the lender tries to repossess the vehicle?
A written warning is not necessary for vehicle repossession
If a mortgage lender wants to foreclose on someone’s primary residence, they have to give advance warning in writing and comply with numerous laws intended to protect consumers. Property owners can sometimes defend against foreclosures by showing that the lenders didn’t follow the right steps, even if they were behind on their payments.
Vehicle loans do not come with the same requirements. If a borrower defaults by missing payments, the lender can seek to repossess the vehicle without any advance warning to the borrower. Although you may depend on that vehicle to transport your family or get to your job, you do not have as much legal protection against the loss of your vehicle as you do the loss of your home.
Many companies choose not to give advance warning before repossession because owners may try to hide or move the vehicles to avoid repossession. Once you miss a payment, your vehicle could be at risk, but you can sometimes fight back. Learning more about the process of vehicle repossession could help you protect yourself during a time of financial difficulty.