Used 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


On 8/18/07
Kimberly said
i bought a new vehicle they failed to finance/lost paper work. I have a plate and they paid off my trade in/sold it. went back in and signed paper work to a used vehicle,still no finance, not do to my credit. What can they do.

On 7/28/07
brittany  said
in bussiness there is no such thing as a verbal contract. get it in writing.

On 7/28/07
unfortunately niether one of you two ave any leagal recourse, ignorance of the terms of a legal and binding contract between two consetual legal aged parties is not a defense the first rule of bussiness is let the buyer be ware never trust anyone

On 6/25/07
Sonja said
I bought a truck. We had an agreement for me to pay $500 in 30 days and $500 in 60 days. I did not look when signing the contract and they put down i Owed about $1300 in 30 days, after I gave them 500. they showed me where I owed

On 5/21/07
Mark said
I had a verbal agreement to pay arearages on an auto. The repo company said to bad. Is there any legal recourse to stop the repo?

View all Comments


  • I just bought a used car private dealer but the car was sold from the mechanics used car lot. Today is the 4th day of ownership and now the engine is going out. I belive the guys mechanic knew it was going out and just wanted me to bring it back to get it fixed there. Is there anything I can do?
  • Can the lessor or car dealership make you use one of their insurance companies
  • Is it illegal in the state of AZ to sell/transfer ownership of a used vehicle that has been repaired in an accident without disclosing specifics of vehicle repair history?
  • Are verbal contracts a legal contract? Was buying a car from a friend, car title & registration left in friends name, insurance in my name, never late on a payment, friend sold car out from under me, I had put alot of money into the car. Is there anything I can do? The law officer that came when car was taken said I could file a civel law case, is this true?
  • My car was repossessed and I was only 7 days late from the due date which was on the 15th and I have a 10 day grace period, is this a legal repossession? I also had my purse in the car and was not even able to get that out what rights do I have to get my personal belongings. Please help.
  • what is the policy on return and refund for purchase of used car. is there a time limit or contract / bank approval that would limit me from returning and getting refund of down payment
  • 0ust went to the car lot purchased a car for 5700 dollars cash gave them 5300..drove home owing the remaining balance in 30 days can they repo
  • If your vehicle is repo'd, can they keep or charge you for your belongings that were in the vehicle?
  • If I bought a car on 10/31/15 can I legally take it back? How many days do I have to take the car back to the dealer since they gave me 21 days to pay my down payment.
  • Bought a used car in a private sale. One week later the engine developed problems and now I am face with replacing the engin. The seller never disclosed that there was an oil leal. Do I have recoursee?




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  • State Bar of Arizona
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    Referral number 602-257-4434
  • Pima County Bar
    Referral number 520-623-4625
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