When Can a Creditor Repossess Your Car in California?

If you’re struggling to make your car payments in California, it’s important to understand when a creditor can legally repossess your vehicle. Under California law, a lender has the right to repossess your car as soon as you default on your loan agreement, even if you’re just one day late on a payment.

Who Can Repossess Your Car?

In California, two types of individuals may repossess your car: an employee of the legal property owner or a licensed repossession agency. Repossession agencies must be licensed by the California Department of Consumer Affairs’ Bureau of Security and Investigative Services (BSIS).

To verify a repossession agent’s license, you can visit the BSIS website and select the “Verify a License” option. Be sure to click the “Boards and Bureau” box and scroll down to “Security and Investigative Services, Bureau of” to narrow down your search.

Where Can Repo Agents Take Your Car?

Repossession agents in California can take your car from any publicly accessible place, including your driveway. However, they cannot enter a locked property or gated community without permission from the property owner or person in lawful control of the property.

Repo agents are also prohibited from breaching the peace during a repossession. They can take your car if it’s parked on the street or in a public parking lot, and they can even tow your vehicle at night.

After your car is repossessed, you’ll receive a written notice. This notice serves as confirmation that your car was repossessed and not stolen. The repo agent is required to notify law enforcement that the vehicle has been towed within an hour of the repossession.

What Happens After a Repossession?

If you don’t pay what you owe, the lender has the right to sell your car at a public auction. They must give you a notice of intent to sell the car at least 15 days before the date of the sale.

The sale price must be commercially reasonable, meaning the 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, and then 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, known as a deficiency balance. Your lender can sue you for this amount if you don’t pay it.