New Automobile Buying Tips Article


Repossession Law

Repossession of Property
Financing occurs when you buy property (a vehicle, mobile home or furniture) but do not pay the entire sales price at once and the dealer or a bank (the creditor) lends you money so you can pay off the price of installments.
Security Interest is an interest that the creditor takes in the property until it is paid off. It acts as a guarantee that you will pay back in money.
Repossession - if you do not pay back the money as promised, the creditor has the right to take back, the property.

What happens if you fall behind on your payments?
If you are late on a payment, the creditor can choose to accelerate your loan. You will then owe the creditor the entire amount due on the loan. If you can't pay the entire amount due on the loan in a certain time period (usually 10 days), the creditor can then take back, or repossess, the property.
The creditor must follow the law when he repossesses your property. The law that applies will vary depending on where the repossession takes place. If the creditor wants to repossess your property from within the boundaries of the Navajo Nation, there are much stricter requirements than if he wants to repossess your property outside of the boundaries of the Navajo Nation. If your creditor follows the law, the creditor will eventually be able to repossess your property.

What should you do?
The best way to avoid repossession is not to be late on your payments. But sometimes you fall behind because of events outside your control. What do you do?

  1. Call or go to see your creditor.
    Most of the time your creditor is the best person to help you avoid repossession. They can help you set up your payments so you can get caught up. They can give you extensions, lower your payments and many other things to help you avoid repossession. Don't take the property with you off thereservation when you go to talk to the creditor. It's easier for the creditorto repossess your property once it's off the reservation.
  2. Get a loan.
    Relatives, friends or the Navajo Nation may be able to give you a loan so you can catch up with your payments. Usually a creditor won't repossess your property if you bring your account current even thought he has accelerated the loan and has the right to repossess. Your creditor would rather have you pay then get the property back.
  3. Refinance your loan.
    Go to a bank or a credit union to see if they will pay off your original creditor and then you can start making payments to them. You are responsible for paying your debts. If you do not pay on your loan, eventually the creditor will repossess. The creditor can be your friend, not your enemy. Work with the creditor to keep your payments current and avoid repossession!
If the creditor takes you to court.
You will receive a notice from court telling you there will be a hearing.
  • Explain to the Judge why you are behind on your payments.
  • The Judge will decide whether to allow the repossession.
  • Remember that if you are still behind on your payments at the time of the hearing, the Judge will probably order repossession.
  • If you want to return a vehicle to the car dealer - ask the dealer to
  • agree in writing to waive the deficiency (see below) in exchange for your
  • "voluntary surrender" of the vehicle.

After repossession
After your vehicle is repossessed, or if you turn in the vehicle without getting the dealer to agree to waive any deficiency, you may still owe money to the dealer. This is called a deficiency. The deficiency is the amount still due on your loan after the vehicle is resold. The repossession and deficiency will be reported to your credit history and will damage your credit for approximately seven years.

Failure to Return Your Motor Vehicle May Be a Felony
Arizona law makes it a Class 6 Felony to fail to return your vehicle in certain situations. In order for you to be prosecuted for a Class 6 Felony, the following conditions must be met:

  1. Your original contract must warn you that it is unlawful to return a motor vehicle subject to a security interest upon notice of default.
  2. You must have failed to make a payment for more than ninety days.
  3. Your creditor must have sent you a notice indicating you are in default, requesting that you return the vehicle, and explaining how to return your vehicle.
  4. You fail to cure the default within thirty days of receipt of the above-letter.

Revised 3/4/03


Comments:

On 3/29/07
Maria said
What if verbal warning has been given repeatedly to pay or repossesion will take place?

QUESTIONS

  • My son bought a car in Arizona and a day later left to Illinois was that against the law?
  • Can I finance a car if I am currently in the middle of a chapter 7 or chapter 13 bankruptcy?
  • Can dealers/private sellers of autos contract away implied warranties by "no warranties - as is" provisions in the sales document?
  • Can I purchase a new car using my husbands income to qualify for the loan without his name being on the loan application ? The dealership is calling it family income and says I can do it. I think it's illegal maybe even fraud and really don't want to do it. Is it illegal for the dealer to encourage me to use his income for my benefit without his knowledge?
  • My question is directed at the lemon law. My vehicle manufacture has agreed to buy back my vehicle after several unsuccessful repair attempts. They did a mileage use deduction on their offer and I am trying to find out what the formulation is for the figure they gave me. I have chekced the ARS and can not find it in title 44.
  • If I buy a new vehicle how many days to back out do I have after signing papers if I do not want the car?

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