Repossession Laws in South Dakota

When a borrower falls behind on their auto loan payments, their lender can repossess the vehicle. Repossession is the process of taking back the collateral that secures a loan. In a car or truck loan scenario, the vehicle itself acts as the collateral for the loan and can be seized if a borrower defaults on the terms of their loan. 

Creditors can’t just seize a car, truck, or ATV under any circumstances, though. South Dakota law outlines the rights and responsibilities of borrowers and creditors alike. If you’re at risk of an auto repossession in South Dakota or your vehicle has been repossessed already, read on to learn about your options.

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

Depending on the terms of your auto loan, your vehicle could technically be repossessed if you’re even a single day late in paying your auto loan. But most lenders won’t think about repossessing a vehicle until a loan is in default. Missing a payment will make you delinquent on your account, but your account likely won’t be classified as in default until you’re 90 days past due. If you’ve ever been at risk of losing real estate due to late payments, know that the repossession process is fairly similar to the foreclosure process. 

Will I Be Notified Before the Repossession? How?

Lenders aren’t required to give borrowers notice before repossessing a car in South Dakota. But if your lender decides to repossess your vehicle, they must provide you with written notice about reclaiming your vehicle after retaking possession of it. This notice will contain important information concerning how much it’ll cost and the deadline to redeem your vehicle to avoid having it sold at auction. You’ll also get reasonable notice about the time and place of the auction. This notice must also contain specific contact information that can be used to redeem your vehicle. If you don’t respond in time, your car or truck will be sold by the lender.  

How Can I Prevent a Repossession?

The surest way to prevent car repossession is to catch up on your overdue payments. Be proactive and contact your lender to work out a plan. Your lender may be able to provide a temporary deferment that allows you to pay a lower amount for a few months until you catch up. Or you may be able to skip a payment and tack it onto the end of your loan cycle. Sometimes you can even renegotiate the terms of your loan or refinance it to make your payment more manageable going forward. 

Whatever path you choose, you’ll need to catch up on your outstanding balance to avoid repossession. If you can’t catch up on your payments but want to avoid the hit to your credit score that will occur if your vehicle is repossessed, talk to your lender about voluntary repossession. This may be an especially good option if your car loan is upside down and you don’t foresee being able to make timely, regular payments on your loan anytime soon. 

What Can Repo Companies in South Dakota Do? 

While your lender is required to provide you with notice following a repossession, the state of South Dakota doesn’t require repo companies to notify you before they take possession of your vehicle. They can’t trick or mislead you into handing over your vehicle or use violence to achieve their ends. Similarly, you’re not permitted to make a repossession agent leave by force. This kind of response to repossession may be considered a “breach of the peace.” 

Repossession services companies can take your vehicle from public spaces and from most private property that isn’t locked. If you keep your vehicle in a locked space, South Dakota repossession companies may seek a court order to repossess it from where it’s parked. 

What About the Personal Property in My Car? 

If you’re already behind on your auto payments, remove all of your personal property from your vehicle. While repo companies aren’t allowed to keep personal property that’s been left in a repossessed vehicle, retrieving this property can be a pain. They should provide you with information about how to collect your things, but you may need to connect with the repo company to retrieve your personal property if they don’t. They may or may not charge you a fee for holding onto it. Know that you won’t be able to retrieve items attached to the vehicle, such as an upgraded stereo system, even if you installed it yourself. 

What Happens After a Repossession in South Dakota? 

Once a repossessor takes your vehicle, you can either take steps to redeem the vehicle or your lender can sell it at auction to the highest bidder. The lender must give you reasonable notice about the time and place of the auction in the paperwork they’re required to provide after the repossession. Note that in some Midwestern states, as few as 10 days’ notice is considered “reasonable.” Proceeds from a sale will be used to cover your outstanding balance, as well as any repossession fees or costs. Once your vehicle is sold, the certificate of title will no longer be in your name.

If the car sells at auction for less than what you owe — the total of your loan balance and repossession costs — you’ll have a deficiency balance on your account. This means that you’ll need to repay your lender for the remainder owed. If you don’t repay the deficiency balance, your lender could sue you to get a court judgment to garnish your wages or use a bank levy to seize funds from your bank account.

Do I Still Owe After a Repossession in South Dakota? 

Having your car repossessed doesn’t nullify your loan agreement. You’ll still be responsible for either repaying the loan balance to get your car back or paying any deficiency balance that may exist after the car has been sold at auction. Your overdue balance will likely include the outstanding loan amount, late fees, and repossession costs and fees. You’ll need to make good on this balance even if you voluntarily surrender your vehicle to avoid getting sued for nonpayment. 

Can I Get My Car Back After a Repossession in South Dakota? 

If your car has been repossessed and you want it back, you may be required to pay off the full balance owed plus repossession costs. If you can enter into an alternative arrangement with your lender, that’s great. While lenders are usually more likely to engage in some sort of repayment plan for an overdue balance before a car has been repossessed, if you’re navigating extreme circumstances, your lender may make an exception. You won’t be able to get your car back after it’s sold at auction. So if you’re thinking about taking out a loan to pay off your outstanding balance, you’ll need to do so quickly. 

Where Can I Find More Information About Repossession Laws in South Dakota? 

If you don’t find reading South Dakota repossession laws (which can be found in the South Dakota Uniform Commercial Code, or UCC) to be helpful or enjoyable, you can learn more about South Dakota’s unique approach to repossession by seeking legal advice at a local legal aid service office:

• South Dakota Law Help

• Dakota Plains Legal Services

• East River Legal Services