North Carolina Repossession Laws: What You Need to Know

Repossession is the process of taking back a car after the owner defaults on their auto loan. Each state has different laws and regulations that dictate every step of the repossession process from start to finish. Here’s what you should know if you’ve fallen behind on car payments in North Carolina.

What Is Repossession?

If you took out a loan for your car, missed payments put you at risk of repossession. Car repossession laws also apply to pickup trucks and boats.

Your vehicle can be towed away when you least expect it. Lenders can repossess your vehicle because when you take out a loan, the car secures that loan.

The lender has a security interest in the car. That means they can take your car if you stop making payments. You can take action to avoid repossession. You might be able to get your car back after repossession.

How Many Payments Can You Miss in North Carolina?

In North Carolina, a lender can legally start the repossession process after one missed payment. But the actual repossession timeline depends on your contract terms.

If you think you’re going to be late with a payment, review your contract. Check when your vehicle can be repossessed after you miss a payment or default. You can also call the lender and ask them to explain this.

Will You Be Notified Before the Repossession?

In North Carolina, lenders aren’t legally required to give you notice before repossessing your car. If you’ve defaulted on your auto loan, the repossession company can take your car while you’re at work. They can take it while you’re sleeping at home. No prior notice required.

Your contract might include a clause requiring the lender to give you prior notice. Review your loan agreement to see if a notice is required.

How Can You Prevent a Repossession?

You’ll save yourself money and a headache if you can prevent repossession. Try calling your lender before you’re late with your car payment. See if you can make other payment arrangements.

Check your car loan contract. Ask your lender if you can cure your default. Curing a default means catching up on your missed payments. You bring the loan current and avoid repossession.

If you had a life change that affects your monthly income, talk to your lender about refinancing. Refinancing your car loan can help if you owe more than your car is worth.

If catching up seems impossible, consider selling your car. You can pay off your loan and help maintain your credit.

You can also voluntarily give up your car to the lender. Doing so can help you prevent an unexpected repossession. You’ll avoid potential additional towing and repo costs.

If you’re struggling with multiple debts, our partner Cambridge Credit Counseling can help you create a payment plan that works for your budget.

Can Bankruptcy Stop Repossession in North Carolina?

A defaulted loan can quickly rack up extra expenses. Late fees, repossession costs, and towing fees add up fast.

If you’re at the point where you have uncontrollable debt, you might consider filing bankruptcy. When you file bankruptcy, an automatic stay is put into place. The stay will stop collection activity from creditors, at least temporarily.

What Can Repo Companies Do in North Carolina?

In North Carolina, lenders are allowed to use self-help repossession. That’s just a legal term for taking back your car without going through the court system first. But only if your car was used as collateral for the loan.

Self-help doesn’t mean repo companies can do whatever they want. There are important limits:

• They can tow your car from places like your driveway, a store parking lot, or the street.
• They can take it from your workplace if it’s in a public area.
• They can’t take your car from a locked garage.
• They can’t take it from behind a locked gate or from a locked storage unit.

Repossession agents can’t breach the peace. That means they’re not allowed to threaten you. They can’t use violence or cause a public disturbance.

Courts have said they can’t bring along a uniformed police officer. That crosses the line from self-help into intimidation.

If you think a repo agent broke the rules, report it to the North Carolina Attorney General’s Office.

If you’re an active-duty service member, you have extra protections. Under the Servicemembers Civil Relief Act, a creditor must get a court order before they can repossess your car.

What About the Personal Property in Your Car?

If you think car repossession is right around the corner, clear out your personal belongings as soon as you can.

You’re entitled to your personal property. If you’re in North Carolina, you’ll have to call the lender. Make arrangements to get your personal belongings out of the car.

You can call the police department to confirm the repossession. Find contact information for the towing company. You can also call the repo company to find out how to get your personal items back.

Tow truck companies and repossession companies are generally prohibited from keeping personal property. If you have difficulty retrieving your items, contact the state attorney general’s office.

What Happens After Repossession in North Carolina?

After your lender or creditor has repossessed your car, it can be sold. The sale happens at a public auction or in a private sale.

The creditor must send you written notice about the sale. The notice must include the date, time, and place of the auction.

You can attend the public sale and bid on the repossessed vehicle. You can have others bid on your behalf.

After the sale, the proceeds will go toward the balance of the loan due. That includes late fees or penalties. But first, it will pay any repossession fees. Towing costs, storage, and insurance come out first. You’ll owe more than just your past payments.

Do You Still Owe After Repossession?

Your car can be sold to the highest bidder. If it’s sold for less than the amount you owe, your debt isn’t cleared up. When this happens, you’ll owe a deficiency balance.

Voluntarily surrendering your car will lower your deficiency balance. You won’t have to pay the cost of repossession.

If you’re facing a deficiency balance and other mounting debts, our partner Cambridge Credit Counseling offers free consultations to help you explore your options.

Can You Get Your Car Back After Repossession?

The Tar Heel state doesn’t have a law giving you the right to redeem your car. You can review your contract to see if it grants you a right of redemption.

You can bid on your car at a public sale. You can have a friend buy your car for you if you want to get it back.

Where to Find More Information About North Carolina Repossession Laws

• Legal Aid of North Carolina provides legal assistance to low-income individuals for civil matters including repossession.
• North Carolina Department of Justice offers information on car repossession.
• LawHelpNC.org provides consumer car repossession quick facts and contact information for legal assistance.
• North Carolina Uniform Commercial Code contains the text of repossession laws in North Carolina.