Repossession Laws in Arkansas

When you finance a vehicle, you get to drive it away even though you haven’t finished paying for it yet. In exchange, the lender has a security interest in the vehicle. This means the lender has the right to take the car back from you if you don’t pay your car loan. Taking the car back is called repossession. 

If you’re facing a possible repossession in Arkansas, it’s important to understand your rights and options. This guide covers the auto repossession process in the Natural State and what you can do if you’re at risk for repossession.

How Many Payments Can I Miss Without Risking a Repossession in Arkansas?

In Arkansas, your lender can repossess your vehicle immediately if you default on your payments. What counts as default depends on the terms of your loan agreement. Some common examples are:

• Falling a certain dollar amount behind on payments

• Reaching a certain number of days late

• Failing to maintain the required auto insurance

Check your contract to find out your default terms. If nothing is specified, your lender can repossess your car the instant your payment is late. A partial payment is considered late under Arkansas law.

Will I Be Notified Before the Repossession? How?

Your lender doesn’t have to notify you before sending a repo company to pick up your car. The repo company doesn’t have to notify you, either. Sometimes, though, your lender may choose to send you a notice of default or a final warning before repossessing your car. This is because repossessions can be expensive and time-consuming for creditors. They would usually prefer to work out a payment arrangement. If you receive a notice of default or a repo warning, contact your lender right away to see what you can do to prevent repossession.

How Can I Prevent a Repossession?

If you’re behind on your car payments, your best move is to contact your lender to find out your options. You may be able to work out a solution to avoid repossession and to help you catch up on your payments. If you’re current on your payments but concerned you could soon fall behind, it’s best to be proactive. Contact your lender, let them know about your situation, and see if there’s anything you can do to avoid a default. 

In some states, if you default on your loan, your lender must give you a chance to bring the loan current before repossessing your vehicle. This is called a “right to reinstate” or a “right to cure the default.” Arkansas law doesn’t give consumers a right to reinstate auto loans before repossession. But you might still have this right if it’s specifically provided in your loan agreement.

What Can Repo Companies in Arkansas Do? 

In Arkansas, a repo company can repossess your car in any public or private place as long as they don’t breach the peace. Examples of what could be considered a breach of the peace include:

• Using force or violence. A repo agent can take your car from your driveway, yard, or open garage, but they can’t cut a lock or forcibly enter a locked area.

• Making unreasonable or excessive noise.

• Using abusive or threatening language.

The same rules also apply to you and anyone else on the scene. You could face criminal charges if you breach the peace or try to physically stop the repo company from doing its job. 

A repo agent can legally follow you to a public place and repossess your vehicle. If you leave your car at a body shop, tire store, or mechanic’s shop, a repo company may repossess it from the shop. But a repo company can’t trick you into taking your car to a shop and then repossess it after you leave. 

In Arkansas, a repo company or creditor may also disable your vehicle by using a “kill switch.” The vehicle must be on your property when it’s disabled. A repo company or lender can’t disable your vehicle in a public place or on someone else’s private property.

Arkansas doesn’t require repossession agents to show you any sort of license or documentation before they repossess your car. You can verify that a repo company is legitimate by looking it up on the Arkansas Towing and Recovery Board’s website.

What About the Personal Property in My Car? 

Vehicles are often repossessed with the owner’s belongings still inside. If you’re present when your car is repossessed, the repo agent should tell you where and how to get these items back. Otherwise, you’ll need to contact your lender for that information. 

The repossession company will usually give you an appointment time to come pick up your property. They may remove your belongings from the vehicle, box them up, and charge you for storage. You’ll have to pay the storage costs to get them back. Under Arkansas repossession law, though, they can’t charge you for removal or storage of certain types of property, including:

• Cell phones

• Wallets or purses and their contents

• Child-restraint seats

• Medications, prosthetics, and prescription eyeglasses

• Personal or legal documents

• Books and photographs

If you think there’s a chance your car could be repossessed, it’s a good idea to remove as much of your property from the vehicle as possible. That can save you the headache of trying to get it back after the repossession.

What Happens After a Repossession in Arkansas? 

After your lender repossesses your vehicle, they can sell it at a public auction or a private sale. The sale procedure and price must be commercially reasonable. A sale is commercially reasonable if the lender made a good-faith effort to get a fair price for the car. A lender may sell, lease, or keep a repossessed vehicle, but they must take some action within a reasonable time after repossession. A judge must decide what counts as reasonable. Generally, though, a delay is unreasonable if it causes the vehicle’s value to decrease or creates big storage expenses.

Your lender must send you a written notice telling you what they’re going to do with your car, such as sell it privately or at auction, and when and where the sale will take place. If the car is going to be sold at a public auction, you’re allowed to attend the sale and bid on the car. The written notice must include a phone number you can call to get more information about the sale. Your lender must send you this notice at least 10 days before the sale date.

After selling your car, your lender must use money from the sale to first pay all repo- and sale-related expenses. Then, the lender must apply the rest of the sale proceeds to your loan balance. Your loan balance could include unpaid interest, late fees, and other charges. Any money that’s left after paying your debt is called a surplus. You’re entitled to any surplus that results from the sale. If the sale proceeds aren’t enough to cover all the repo and sale expenses and your entire loan obligation, you could have to pay a deficiency balance.

A deficiency balance is how much you still owe after applying all the money from the sale. Your lender must send you a written explanation of how they calculated the deficiency amount and an address and phone number where you can request more information. Your lender can sue you for this balance if you don’t pay.

Do I Still Owe After a Repossession in Arkansas? 

Car repossession and sale expenses typically include things like towing fees, storage costs, cleaning fees, advertising costs, and attorney’s fees. If the proceeds from selling your car aren’t enough to cover these charges and your loan balance, you’ll still owe the remaining debt. If you’re at risk for repossession and think you owe more than your car is worth, consider turning in your car voluntarily. You’ll still be on the hook for any deficiency balance, but you’ll avoid having repo costs added to your debt.

Can I Get My Car Back After a Repossession in Arkansas? 

You have the right to redeem your car at any time before it’s sold. To redeem your car, you must pay everything you owe, including all repo expenses and your entire loan balance (not just the past-due portion). The written sale notice from your lender should include a phone number you can call to find out the exact amount you must pay to redeem your car. The notice should also include a phone number and address to request more information about how that amount was calculated. 

You must pay the full redemption amount before the sale to get your car back. If your lender doesn’t plan to sell your car at a public auction, they’ll give you a redemption deadline in the notice instead of a sale date. You must pay the full redemption amount before this deadline to get your car back. In Arkansas, there’s no right to redeem a car after it’s been sold.

Where Can I Find More Information About Repossession Laws in Arkansas? 

• You can file a complaint or verify a repo company’s license with the Arkansas Towing and Recovery Board

• Arkansas Attorney General’s Consumer Protection Division Automobile Tips

• Arkansas Law Help Repossession Guide

• Sample Pre-Sale Notice Form