When you purchase a car on a loan from a bank or other creditor, you do so under an agreement that you will ensure the vehicle is protected to prevent serious losses as well as make payments with interest until the balance of the loan is paid off. However, when you fall behind on one of these requirements, your creditor could choose to repossess your car. Let’s take a closer look at this process in order to help you discover whether or not you’re at risk of this happening to you.
When Can Your Car Be Repossessed?
Your car can be repossessed by a creditor in two different situations: when you fall behind on payments, causing your loan to go into default, or when you fail to maintain an adequate insurance policy on your vehicle for the duration of your loan. Let’s delve into these a little further.
In Florida, your creditor is allowed to start the repossession process as soon as your loan goes into default. What makes your loan go into default depends on the terms of your loan, so make sure you carefully read this portion of your contract before signing anything. In some cases, even a single payment missed can lead to default, and lead to your car being repossessed.
The terms of your contract will also usually require you to carry an insurance policy on your vehicle for the life of the loan. They do this to essentially make sure the collateral on the loan you have signed (the vehicle itself) isn’t lost without some form of financial compensation that can help pay off the remainder of the loan.
Your insurance company will usually automatically send your creditor a letter providing proof of insurance with a listed expiration date every time you renew your policy. However, if you stop paying your insurance premiums, your creditor won’t get this letter when they’re expecting it, and they could choose to repossess your vehicle in order to make sure it isn’t damaged.
If you’ve fallen behind on your payments and of auto repossession, don’t hesitate to reach out to a Fort Lauderdale debt attorney for help! Contact Loan Lawyers today at (954-523-4357) for a free case evaluation.