Repossession is the process of taking back a car after the owner defaults on their auto loan. Each state has different laws and regulations that dictate every step of the repossession process from start to finish. This page will provide an overview of California's Repossession Laws and what you should know if you've fallen behind on car payments.
Written by Upsolve Team.
Updated January 4, 2022
If you’re behind on your car payments, your vehicle could be at risk of repossession. Repossession is when your auto lender physically takes your car from you after you default on your loan. When you finance a car, you sign a security agreement. In this agreement, you pledge the car as collateral for the debt. This is what allows the lender to repossess the car if you don’t pay. When repossessing a car, the lender and repo company must comply with California law. This guide covers how repossessions work in the Golden State and what you can do if you’re facing repossession.
How Many Payments Can I Miss Without Risking a Repossession in California?
Under California law, your lender can repossess your vehicle the instant you default on your loan terms. Depending on your financing agreement, default could mean being one or more days late on your payments or paying less than the full payment amount. Some auto loans require you to keep a minimum amount of insurance on the vehicle, which means you’re in default if you let the insurance lapse. Review your contract carefully to learn what counts as a default for your loan.
Will I Be Notified Before the Repossession? How?
In California, your lender doesn’t have to give you any advance notice of repossession. In some cases, though, your lender might send you a final warning or a notice of default before proceeding with repossession. Your loan agreement might also include some notice requirements, even though state law doesn’t provide this right. If you receive a warning or notice, contact your lender to see if you can work out an arrangement to avoid repossession.
How Can I Prevent a Repossession?
The best way to prevent repossession is to catch up on the payments, if possible. You can reinstate your loan — and stop the repossession — by paying all the missed payments, plus any late fees and unpaid interest. Under California law, you have the right to reinstate your loan at any time before repossession, even if the right to reinstate isn’t listed in your loan agreement. If you can’t afford to catch up with all your payments at once, you may still be able to catch up over time. Contact your lender to find out what you can do to prevent a default or repossession.
What Can Repo Companies in California Do?
Under California law, a repossession agent can take your car from a public parking lot or street or from a private business or residence. A repo agent may come onto your private property, including your driveway, yard, or unlocked garage. But they can’t breach the peace. Breaching the peace includes using force, such as cutting a lock or forcibly entering a locked garage, gate, or enclosed area. Breaching the peace also includes using violence, threatening you, or damaging your car or other property.
The rule against breaching the peace applies to everyone during a car repossession, including you and your family members or friends. If you breach the peace or otherwise physically keep the repo company from doing their job, you could be charged with a misdemeanor and face other fines and charges in addition to ordinary repo expenses.
Vehicle repossession companies in California must be licensed by the Bureau of Security and Investigative Services (BSIS). The repo agent or repossessor must show you proof of their BSIS license if you ask for it. Repo companies must also have either their BSIS license number or business name, address, and phone number visible on both sides of their tow truck. You can verify a company’s license status on the California Department of Consumer Affairs website.
Instead of hiring a repossession agency, your lender can have one or more of their employees repossess your vehicle. The lender’s employee doesn’t have to be a licensed repo agent or comply with the BSIS requirements. They still must follow the state laws about breaching the peace.
What About the Personal Property in My Car?
If you have personal belongings in your car when it’s repossessed, the repo agent should tell you how to get those items back. If you’re present during the repossession, the repo agent may allow you to take your personal property out of the car before it’s towed away. But the repo agent isn’t required to let you do this.
After repossession, the repo company will remove all your personal items from the vehicle. Items that are attached to the vehicle, such as custom rims or after-market speakers, typically aren’t removed. The repo company can charge you for storing your personal effects. You’ll have to pay the storage fees to get your things back. Within 48 hours after the repossession, the repo company must send you:
Contact information for the repo company and your lender,
A list of all the property that was removed from your car, and
Instructions for how to get your property back, including storage fee information.
If you don’t pay your storage fees and pick up your property within 60 days after the repossession, the repo company can keep, sell, or dispose of your belongings. If you’re at risk of repossession, remove your property from your vehicle so you won’t have to deal with getting it back from the repo company.
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What Happens After a Repossession in California?
A lender can keep or lease a repossessed car, or they can sell it in a private sale or at a public auction. “Tote-the-note” or “buy here, pay here” dealerships often resell repossessed cars at the dealership. Large banks and other finance companies usually sell repossessed vehicles through public auctions. Within 60 days after taking your car, your lender must send you a written notice of intent telling you what they're going to do.
If your lender intends to sell your car at an auction, this notice must include the sale date, time, and location, plus a number you can call to get more information about the sale. You’re allowed to attend the auction, bid on your car, and even buy it back. You’re entitled to at least 15 days’ notice before the sale date.
No matter how your lender sells your car, the sale price must be commercially reasonable. This means that your lender made a reasonable effort to get a fair price for your car. The lender must use the money from selling your car to first pay any expenses from the repossession and sale. Then, they’ll apply the rest of the sale money to your loan debt.
If there isn’t enough money to pay your entire loan balance — including interest and late fees — you’ll still have to pay the difference. This difference is called a deficiency balance. Your lender can sue you for this amount if you don’t pay it. A lender can only charge you a deficiency if they followed all the rules and sent you all the required notices on time.
Do I Still Owe After a Repossession in California?
Even if your car has been repossessed, you’re still responsible for your car loan. Under California repossession law, you’re also responsible for all the costs related to the repossession and sale. These costs typically include:
Towing, cleaning, and processing fees from the repo company
Vehicle storage fees and property storage fees
Administrative fees to local law enforcement
Auction fees, advertising costs, and legal fees
You can avoid having these charges added to your debt by voluntarily turning your car over to your lender. If you owe more than your car is worth, you’ll still have to pay a deficiency balance after a voluntary surrender, but you’ll save hundreds or thousands in repo fees and sale costs.
Can I Get My Car Back After a Repossession in California?
Within 60 days after repossession, your lender must send you a notice telling you what they intend to do with your car. This notice must also explain your options for getting the vehicle back. You have two options under California law: redemption or reinstatement.
To redeem your car loan, you must pay your entire loan balance — not just the past-due portion — including interest and late fees. You must also pay any repo- and sale-related expenses. To reinstate your loan, you must bring your loan current. This means paying all missed payments, interest, and late fees, plus any repo expenses and default charges. You can only reinstate your loan once every 12 months and a total of two times over the course of your loan. You lose the right to redeem your car loan if you:
Used false information on your loan documents
Hid your car from the repo agent or interfered with the repossession
Damaged your vehicle beyond normal wear and tear
Used your car to commit a crime
The notice from your lender must include a phone number you can call to find out the exact amount you must pay to get your car back. You have 15 days after the notice date to either redeem or reinstate your loan. If you need more time to get the money together, you can request a 10-day extension.
Where Can I Find More Information About Repossession Laws in California?
You can Verify a Repo Agent License and see a list of Repossession FAQs from the California Bureau of Security & Investigative Services.
California Department of Consumer Affairs has an informative Consumer Guide to Repossession.
The California Car Buyer’s Bill of Rights explains your rights as a borrower.