Can the dealer repo a vehicle if my payments are current?

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Can the dealer repo a vehicle if my payments are current?

We got a substitution of collateral from a dealership. When we walked out with our new vehicle they told us, and the paperwork we have, shows that we owe nothing. They now claim that they will repo the vehicle if we don’t pay them. Our payments to the finance company are current. Can they do this?

Asked on January 10, 2012 under General Practice, Vermont

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Generally no--a lender's or dealership's right to repossess a vehicle is basd on nonpayment; since the vehicle is collateral for the loan, if the loan is not paid, that's when they repossess it. Conversely, if the loan is up to date, there is no basis for repossession.

If there're threatening repossession, there would seem to be something else going on. For example, have all payments not been recorded or credited? Did you lie (or do they think you lied) on the paperwork, which could create a right of rescission on their part? When you got the substitution of collateral, was there some error, and did you leave owing a balance? Etc. The first step is to ask them *why* they think they can repossess--what is the basis. Once you know, you can decide whether to fix the problem, allow repossession, or fight it. If you can't get an answer, you probably want to retain an attorney immediately.


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