Repossession Laws in Utah

When you use a loan to buy a car, you give the lender certain rights. For example, the lender can take your vehicle away if you break your loan agreement by not making your monthly loan payments. A lender’s right to repossess is based on the car loan agreement and state law. Vehicle repossession laws are very similar across the country, but there are important differences between states. In this article, we’ll discuss how Utah repossession laws work.

How Many Payments Can I Miss Without Risking a Repossession in Utah?

You really can’t miss any. Your car is at risk of repossession if you don’t make a monthly payment on its due date. Your loan agreement gives your lender (also called a lienholder) a security interest in your vehicle while you’re paying it off. Anytime you break a promise you’ve made in your loan contract, you’re in default of your contract. This includes not making your monthly payment on time. Even one missed payment means you’re in default, and the lienholder can exercise its right to repossess the vehicle.

Auto loan contracts sometimes include a grace period. This gives you additional time to make your car payment past the due date. It’s important to read your contract carefully to see if you have a grace period and what it means for you. Some grace periods only save you from having to pay late fees, but you may still be at risk of being in default if you pay late.

Missing a payment or paying late isn’t the only thing that can result in default. In almost every car loan agreement borrowers are required to have auto insurance that covers the vehicle’s value. This is for the lender’s protection. Breaking your promise to keep that insurance current could put you in default even if your loan payments are current.

Will I Be Notified Before the Repossession? How?

That’s really up to your lender. There’s no legal requirement for a lender to give a borrower notice before repossessing a vehicle. But some lenders have policies or practices of giving verbal or written warnings. Whether or not your lender chooses to give you notice also could depend on your history of keeping up with your loan.

How Can I Prevent a Repossession?

If you don’t make your payment on time, your lender’s not likely to send a repossessor the very next day even if they can legally. Your lender will probably be slower to repossess your car if you’ve never been late or it’s been a long time since you were. But guessing how quickly your lender will move to repossess can be dangerous. 

If you’re late, the best thing you can do to avoid repossession is to get caught up before your lender takes action. You might have to include a late fee depending on your contract and how late your payment is. It could help to call your lender immediately. Explaining why you’re late and discussing when you think you’ll be able to make your payment may buy you some time — or at least make it clear how much time you’ve got. 

When your lender sends someone to repossess your vehicle, it’s too late to get caught up. Even before that happens, it could still be too late if your lender has already accelerated your loan. Once you’ve defaulted, your lender can accelerate the loan which means the remaining loan balance becomes due all at once. It’s common for car loan contracts to say that, by signing the contract, the borrower waives the right to be notified of a loan acceleration. A lender doesn’t have to accept a late loan payment once it’s accelerated the loan. 

It’s best to talk with your lender before missing a payment. If you expect you’re going to be late, you might be able to work something out with your lender if you discuss your situation ahead of time. Your lender might agree not to repossess your car if you get your payment in by a certain date. Sometimes it’s possible to defer a payment. That’s where you skip a payment, but it gets added to the end of your loan term. Your lender is more likely to agree to something like this if you’ve had a good history of paying your loan.

What’s not allowed is hiding your car to prevent repossession. That’s a crime in the state of Utah.

What Can Repo Companies in Utah Do?

The lender doesn’t need a court order to hire a repossession company to take your vehicle. This is called a self-help repossession. Also, there are no special licensing requirements to operate a repo company in Utah.

A repo company can take your car from anywhere that it’s accessible. That includes not just public property, but also private property. For example, your car can be taken when it’s parked on the street, in a public parking lot, in a business’s parking lot, or in someone’s driveway. A repossession agent (sometimes known as a repo man) even can repossess your car from inside an open home garage! 

They Can’t Breach the Peace

Self-help auto repossession is legal only when done without causing a breach of the peace. Utah law doesn’t define what actions are breaches of the peace, but they typically include when a repossession agent does any of the following:

• Goes inside a closed home garage without permission

• Breaks into any locked area, like a locked gate

• Uses physical force on someone or damages property

• Threatens to use any physical force on someone or to damage any property

• Repossesses your vehicle even though someone objects as the repo is taking place

Also, a police officer intervening to aid in a car repossession probably counts as a breach of the peace.

You Can Peacefully Object to a Repo

Even if your lender has a right to repo your vehicle, you or someone else can still object to a repossession agent taking the vehicle. If you object during the repossession, the repo agent should stop. Otherwise, it’s a breach of the peace in most cases. But simply telling your lender over the phone that you object to the lender repossessing your vehicle won’t be enough to make it unlawful. Also, the law isn’t clear at what point an objection might be too late to stop the repo. 

If you object, you must do so peacefully. Threatening or getting into a physical conflict with a repo agent isn’t lawful. Neither is damaging the repossessor’s property. Either could lead to criminal prosecution or civil claims against you.

Objecting may stop the repossession at the time, but that doesn’t mean your lender or the repossessor can’t try again later. Also, your lender can go to court for an order requiring you to let them take your vehicle. Making the lender take extra steps to repossess your vehicle can be costly, though. You might be liable for the cost of multiple repo attempts, court costs, and attorney fees.

No Repo of Vehicles From Tribal Lands Unless Tribal Law Allows

There are several Native American reservations within Utah. If your vehicle is located inside a reservation, repossession must follow the law of the Native American tribe with jurisdiction there. 

Limits on Repo of Vehicles Purchased by Members of the Military

Federal law provides specific protections against the repossession of vehicles owned by military servicemembers. The Servicemembers Civil Relief Act’s repo provision applies when:

• The person bought the vehicle before beginning military service, and

• The lender wants to repo the vehicle during the buyer’s service.

Under those circumstances, the lender must get a court order to repossess the vehicle. Utah state law provides similar protections to members of the National Guard on active military service.

What About the Personal Property in My Car?

If you left any personal belongings in your car when it was repossessed, contact the repo company or your lender as soon as possible. It’s best to go get the items back quickly. Your lender has to allow you to get your personal belongings back, and they can’t make you pay a storage fee or other charges to have them returned. This may be unlawful. The Consumer Financial Protection Bureau has viewed it as an unfair trade practice.

If your car is in danger of being repossessed, it’s a good idea to not keep any personal belongings in it. Even if you just make a brief stop somewhere, it’s safest to take everything with you. Getting your things back after a repossession can be a hassle. Plus, there’s a risk something could be missing or damaged when you get your things. It’s hard to prove what was in your car or what condition it was in when the car was repossessed. 

What Happens After a Repossession in Utah?

After your lender repossesses your car, it will sell the car to reduce the debt you owe on your loan. A lender can sell a repossessed vehicle in a private sale or at a public auction. 

You Must Be Given Notice Before Your Vehicle Is Sold

Your lender needs to give you a written notice before selling the car. The notice must be sent in a reasonable amount of time before the planned sale. What’s considered reasonable depends on the circumstances, but any less than 10 days isn’t enough time. 

The notice has to contain specific information, including:

• Instructions explaining what’s required for you to get your car back

• Whether the car will be sold at a private sale or at a public auction

• Either (1) the date, time, and location of the public auction, or (2) the date after which your lender can sell the car in a private sale

• That you can ask for an accounting of your debt, identifying any charges for the accounting

• A statement describing how your liability for any deficiency will be determined

Importantly, the notice tells you how much time you have to pay to get your car back before it will be sold. If your lender is going to sell your car at a public auction, you have another option to try to get the car back. Anyone, including you, can go to the public auction and bid for the car. You may be able to buy it for below its market value. While you’ll probably still have a debt, you’d own the car outright.

The Sale Must Be Commercially Reasonable

Any lender that sells a repossessed vehicle must do so in a commercially reasonable manner. That doesn’t mean they have to get fair market value from the sale of your vehicle. But they must treat the sale as an ordinary business transaction. 

Here are a few examples of sales where commercial reasonableness would be an issue: 

• When a family member, employee, or someone else closely connected to the lender buys the vehicle for a very low price, the sale is probably suspect. 

• When the lender keeps the vehicle for a long time without selling it, that might raise some questions, especially if the vehicle’s value drops significantly. Also, after 90 days have passed since the repossession, a sale can’t be commercially reasonable if the borrower had already paid at least 60% of the cash price before repossession.

What Happens With the Money From the Sale?

Before the sale proceeds are applied to your debt, they’re first used to cover the repossession and sale costs. Your lender can use the money from the sale to cover any reasonable expenses involved in repossessing your car, storing it, preparing it for sale, and selling it. Your lender can also deduct any reasonable attorney fees and other legal expenses if your loan contract authorizes them. Once all these expenses are paid, the remaining sale proceeds will be applied to your debt. 

In the unusual event that there’s money left after paying your remaining debt, your lender must give you the surplus. But it’s far more common to owe on the remaining loan balance, which is called a deficiency balance. 

When To Get Legal Advice

If it seems like there was something improper with the repossession process, you may want to get legal advice. It’s best to act quickly, especially if you’re facing a deadline before your car gets sold. You may want to get legal advice if:

• The repo occurred when you weren’t in default.

• The repo agent breached the peace.

• The written notice following the repossession had incorrect information or was missing required information.

• Your lender sold the car for a very low price and something seems off with the way the sale took place. 

Do I Still Owe After a Repossession in Utah?

You’ll likely still owe the lender money after it repossesses and sells your car. The repossession and sale give your lender a chance to cover at least part of your outstanding debt. But it’s rare for the sale to bring in enough money to cover all the repossession costs and your entire loan balance. 

It’s common to have a deficiency balance for several reasons, including:

• The repossession fees and sale costs are added to your loan balance.

• Repossessed vehicles often sell for below market value. 

• When your vehicle was repossessed, you may have owed more on your loan than your vehicle was worth — in other words, you were upside-down on your auto loan. That’s not unusual because vehicles depreciate quickly, and some loans have high interest rates. When you’re upside-down on your loan, it’s a sure bet that the sale proceeds won’t cover your balance.

If you know that you can’t afford to keep paying your car loan anymore, you might want to voluntarily return your car to your lender. This is referred to as voluntary repossession. Its main benefit is that your lender won’t have to pay a repossession agent to go get your car. That’s at least one repossession cost that won’t get added to your deficiency balance. 

Utah law does prohibit deficiencies for some lower-cost vehicles. If the cash price of your vehicle when you bought it was $3,000 or less, then your lender can’t make you responsible for a deficiency balance. There are two exceptions to this rule:

• The vehicle’s been damaged to a significant degree.

• You’ve taken some action — for example, filing bankruptcy — that would make a judgment on your debt unenforceable.

If your car is repossessed because you defaulted on a title loan you’d taken out on a vehicle you own, the creditor can’t go after you for a deficiency. The only exception to that rule is if you committed fraud.

If your lender demands that you pay the deficiency balance, it also needs to send you a written explanation of how it calculated the deficiency. The explanation must state the total amount of the deficiency and show:

• Your debt amount before the sale of your repossessed vehicle

• How much your vehicle sold for

• The total amount of any credits you’re due, such as for unearned loan interest, canceled insurance, or canceled service contracts

• The total amount of all costs you were charged for the repossession and sale of the vehicle

If your lender hasn’t made a demand yet, you have the option of asking your lender for an explanation of the deficiency. Once you request it, your lender has 14 days to provide it to you. 

While your lender may demand that you pay the deficiency balance, the only way your lender can try to force you to pay is by taking you to court. Sometimes lenders will sell your debt to a debt buyer instead. The debt buyer may then try to get you to pay the debt. 

Can I Get My Car Back After a Repossession in Utah?

After repossession, you’ll have a limited right of redemption that gives you an opportunity to buy your car back. But to redeem your car, you’ll have to pay the entire balance of the loan and all the costs associated with the repossession, not just the past-due amount. You can redeem your car anytime until your lender sells it. The notice that your lender is required to send before selling your car must tell you what you have to do to redeem your car. 

Where Can I Find More Information About Repossession Laws in Utah?

• The Utah Courts website contains information on representing yourself in a debt collection lawsuit and an answer form for responding to a complaint. The answer form contains some common defenses to a lawsuit seeking a deficiency judgment. It also has resources for finding legal assistance.

• Utah Legal Services provides free legal assistance to qualifying individuals.

• The Utah State Bar sponsors the Utah Legal Help website, which can help you find free legal help options or attorneys who charge reduced fees. 

• The National Association of Consumer Advocates is an organization of consumer law attorneys. You can search for NACA members who are licensed in Utah.