Repossessing a vehicle isn't as simple as taking the car under cover of night and never being heard from again. You generally don't need to provide advance notice that you intend to take the car -- though some state laws vary on that count, depending on the details of the lending agreement -- but you do need to provide specific notice after the fact.
The required contents of the vehicle repossession letter will vary slightly based on state law, as do the rights the debtor has to reclaim the vehicle. However, the basic requirements are that you inform the delinquent borrower that you have called the loan and repossessed the car, and tell her the next steps that can be followed if she wants to reclaim the it.
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Start by including your name, the loan information and the nature of the deficiency. Confirm that the vehicle was taken as security for the delinquent debt. In most cases, you'll also need to include the following information in your vehicle repossession letter:
- The outstanding balance on the loan at the time of the repossession, including any relevant fees or other charges. States can limit some of these charges, but also allow you room to provide added security. For example, Ohio caps the fees associated with the repossession at $25, as of 2015.
- The deadline for the buyer to redeem the loan. For example, in Connecticut, the delinquent borrower has 15 days to settle the debts associated with the vehicle, along with any storage costs.
- The method by which the buyer can make the necessary payment to redeem the loan. For example, you can require the buyer to pay in cash or certified funds to avoid the danger of a bounced check. You may also be able to demand an additional deposit. Ohio, for example, allows you to require up to two months of car payments as part of the funds necessary to reclaim the vehicle.
- Any other relevant state laws. You may have to let the borrower know that the car is being stored within the state per local requirements, for example, or offer an opportunity for the borrower to reclaim personal possessions from the repossessed vehicle.
Make sure to send the letter by the deadline specified in your state. For example, in California, the delinquent borrower must be notified within 48 hours.
Deliver the letter by hand, or send it via certified or registered mail to provide confirmation that the borrower received the information. This helps mitigate a later claim that the sale of the repossessed vehicle was invalid because the borrower never received notice.
You also may be able to include information on the vehicle sale within the repossession letter. If this is permitted by state law, you'll need to include the following information:
- The date of the intended sale or auction -- including the specific time and location for auction sales. This gives the recipient the chance to bid on it, or have someone else do so on her behalf.
- An explanation of what the debtor's obligation is if the car sells for less than owed, and how any surplus funds will be remitted if the opposite happens.
- Details about where the debtor can request more information on how the debt was calculated, how exactly the proceeds will be applied, and any more information about the pending sale.