- Neither repossession agencies nor banks have a legal duty to provide borrowers with prior notice of repossession, according to North Carolina law. Both may proceed with repossessing vehicles without first providing notice. Furthermore, banks can repossess their vehicles after one late or missed payment if their contracts give them the right of repossession after a missed payment. Since most vehicle loans will provide lenders with a right to accelerate or demand future loan payments after one late or missed payment, the bank may demand immediate payment from the debtor.
- Repossession agencies may tow vehicles from the buyer's private property, from public property and from his place of employment. As long as the repossession agency does not violate North Carolina's "breach of peace" laws, they may proceed with repossessing the borrower's vehicle while she is working.
- After repossessing a vehicle, the lender will most likely sell its vehicle through judicial sale, auction or to a private party. The lender must provide the car buyer with advance notice of the location of the sale, the time of the sale and its asking price for the vehicle. Under North Carolina law, lenders can sue borrowers for any deficiency after they sell their vehicles. The deficiency amount is the remaining loan amount minus the sale proceeds.
- In addition to suing a borrower for a deficiency judgment to collect the remaining loan balance, a lender can sue the borrower for any incidental costs of towing or repossession. The North Carolina General Statutes, Chapter 25A or the "Retail Installment Sales Act" governs the rights that lenders have when borrowers default on their loan obligations.
- Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
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