When your car is repossessed in California, the lender can sell the vehicle to recoup some of the money you owe on the loan. However, if the sale proceeds don’t cover the full unpaid balance plus the lender’s costs, you’ll be responsible for the remaining difference, known as a “deficiency.”
Deficiency After Car Repossession
Lender’s Right to Sell the Repossessed Vehicle
Once your car has been repossessed, the lender has the legal right to sell it at a public auction or private sale. The lender must follow certain procedures, such as providing you with a notice of intent to sell the vehicle at least 15 days before the sale.
Calculating the Deficiency Balance
If the sale proceeds from the repossessed vehicle don’t cover the full unpaid loan balance, plus any fees and costs the lender incurred, you’ll be responsible for the remaining difference. This is known as the “deficiency balance.” The lender can then sue you to collect this deficiency.
Your Rights After Repossession
California law provides you with certain rights after your car has been repossessed, such as the right to receive a notice of seizure, an inventory of your personal belongings, and a notice of the vehicle’s sale. You may also have the option to reinstate or redeem the loan, which could allow you to get your car back.