What are the Legal Requirements Lenders Must Satisfy to Repossess Your Car?

Cogburn Law
Madeleine Jones
May 15, 2019

When most people purchase vehicles, they do not pay the full retail price of the vehicle up front; instead, they either lease or finance the vehicle and agree to make timely monthly payments until the lease term expires or the driver fulfills the purchasing agreement by paying off the remaining balance on the vehicle.

Every vehicle purchase agreement includes strict guidelines that outline the driver’s rights and responsibilities. Failure to meet these requirements could lead to the lender or financing company repossessing the vehicle, but the lender must satisfy specific legal requirements to legally repossess a vehicle.

What Are the Laws for Vehicle Repossession in Nevada?

Nevada state law requires any company performing vehicle repossessions to acquire the appropriate license for executing repossessions. They must also obtain work cards from the sheriff’s office in their counties, and any employee performing repossession must hold the appropriate license, be over the age of 18, and have no criminal record.

Before repossessing a vehicle, the lender must notify the debtor in writing of his or her right to fix the problem and avoid repossession. If the debtor missed several car payments, this usually means the debtor must pay those back payments or else the creditor will repossess the vehicle. In Nevada, creditors must provide at least ten days for the debtor to redeem a loan, and the written notice must include the amount required to satisfy repayment. This amount may include additional late fees and other penalties associated with the missed payments.

How Can I Stop a Repossession?

Once you receive the creditor’s notice preceding repossession, the best way to stop the repossession is to satisfy the outstanding balance on the loan plus any applicable fees. Remember, once a creditor repossesses a vehicle it will likely move to sell or auction the vehicle as quickly as possible to recoup the loss on the vehicle.

If the vehicle sells for less than the debtor owes on the vehicle, the creditor can obtain a deficiency judgment and pursue the remainder from the debtor. For example, if the debtor faces a $10,000 remaining balance and the creditor repossesses the vehicle then sells it for $6,000, the debtor would be liable for the remaining $4,000.

It is in any debtor’s best interests to repay the outstanding amount immediately after receiving notice of an unpaid debt.

How Many Missed Payments Will Lead to a Repossession?

If you are a few days late making your car payment, the creditor will likely not push for a repossession. You might incur a late fee, but paying this fee and then resuming timely payments will help prevent repossession. The exact number of missed payments that will lead to repossession will vary based on the purchase agreement or lease agreement for the vehicle. Read your agreement carefully; it probably contains a specific clause pertaining to missed payments and repossession. For example, the contract may state the creditor reserves the right to pursue repossession after three missed payments.

Getting Your Car Back as Quickly as Possible

If you receive notice that your creditor intends to repossess your vehicle, you must pay the outstanding balance and any applicable fees to avoid repossession. However, if the lender or creditor failed to meet the state’s requirements for legal repossession, you may have grounds to contest the repossession. For example, if the creditor failed to provide written notice and the opportunity to redeem the debt, this would be a violation of Nevada state law.

Anyone with specific questions about the repossession of a vehicle should speak with a personal injury attorney right away. A Nevada debt lawyer can review the purchase agreement in question and ensure the creditor satisfied Nevada state law requirements for collecting the debt and help he client explore his or her options for redeeming the debt.