In Utah as in other states, an auto loan is secured by the property purchased with the borrowed funds. In theory, this security assures that the borrower will repay the loan on time, and in full. If a default occurs, however, the lender has the right to claim the security through a repossession. Utah law governs this procedure and sets out restrictions on how a lender may carry out a repo and dispose of the seized property.
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Legal Options in Utah for Repossession
In Utah, a lender has several options when a borrower defaults on a car loan. It can seize the vehicle without warning to the borrower, or render it inoperable by installing a wheel lock or other device. There's no restriction on the time or place of repossession, which can happen on public or private land, during the day or in the middle of the night. Nor does Utah law set a minimum on the number of payments missed -- one missed payment can bring about repossession.
Utah does not require a lender that intends to seize a vehicle as security to go through the courts or win a court order of repossession. However, state law does require any lender who carries out such a "self-help" repossession to do so without breach of the peace or other activity contrary to law. Utah also allows a lender to demand that a borrower who has defaulted on a loan produce the vehicle at a mutually convenient time for repossession.
Disposing of Repossessed Vehicles
After repossession, Utah allows the lender to dispose of the vehicle either privately or through a public sale or auction. The Utah statutes also require at least 10 days notice to the buyer before the sale takes place. The borrower has the right to retake possession by bringing the loan current and paying any reasonable expenses incurred by the lender in repossession.
Deficiencies and Judgments
If a repossession takes place, a borrower may be able to save the vehicle through an emergency bankruptcy filing within 10 days, which would pre-empt any scheduled sale. If a sale does take place, but brings in less than the loan balance, the creditor has a deficiency. The lender can sue for a deficiency judgment against the borrower, but according to Utah law to do so it must have realized at least $3,000 from the sale.