Alabama Repossession Laws: What You Need to Know in 2025
Alabama allows lenders to repossess your car as soon as you default, often after just one missed payment. You will not receive advance notice before repossession. Contact your lender immediately if you cannot make payments to explore forbearance or payment plan options.
Get Payment HelpRepossession takes back your car after you default on your auto loan. Each state has unique laws governing this process. Alabama has specific rules that protect both lenders and borrowers.
You need to understand your rights. Knowledge helps you avoid mistakes and take action when it matters most.
Struggling With Car Payments? Get a Payment Plan Today
Credit counselors can negotiate with your lender to reduce your monthly car payment and interest rate. Act now before repossession happens.
Lower My PaymentCan Your Car Be Repossessed in Alabama?
Your lender can take your car if you stop making payments. The car serves as collateral for your loan. Breaking your loan agreement triggers this right.
Alabama law sets clear rules about when and how lenders can repossess vehicles. These laws also protect your rights before and after repossession happens.
You have options to protect yourself. Understanding the process gives you power to act.
How Many Payments Can You Miss Before Repossession?
Alabama law allows repossession as soon as you default. Default can happen after just one missed payment. Your loan agreement determines the exact terms.
Missing payments is not the only trigger. You can default by:
- Letting your car insurance lapse when your lender requires it
- Moving your car out of state without permission
- Breaking other contract terms in your loan agreement
Every loan agreement differs. Read your contract carefully to understand what counts as default.
Repossession can happen quickly. Even one missed payment creates risk if your contract allows it.
Will You Receive Notice Before Repossession?
Alabama law does not require lenders to notify you before taking your car. Your lender may send a default notice. Such notices typically remind you about repossession risk.
Lenders do not need a court order to repossess in Alabama. Repossession can happen without warning.
How to Prevent Repossession
Catching up on payments is your best defense. Review your loan contract to find your deadline. Call your loan servicer immediately to make a payment.
Pay by phone when possible. Request confirmation via email or mail. Mailed payments can get delayed. Online portals sometimes block payments on past-due accounts.
Contact your servicer if you cannot afford your car payment. You might qualify for temporary forbearance. Some lenders will permanently adjust your payment schedule or monthly amount.
Our partner Cambridge Credit Counseling can help you create a payment plan that fits your budget. Credit counselors work with lenders to reduce payments and interest rates.
What Repo Companies Can Do in Alabama
Repo companies can take your car from the street or your driveway. Alabama law prohibits them from breaching the peace. Agents cannot use violence, threats, or force.
You can ask the agent to stop and leave if you are present. Continuing after you object may constitute breach of peace. Courts can rule against wrongful repossession.
Never physically block an agent or use force. Such actions can result in violence or criminal charges against you.
Alabama does not require special licensing for repossession companies.
Your Personal Property in the Car
Repossession agents cannot keep or sell your personal belongings. You will receive notice about how to retrieve your items. Call the number on your notice if you do not receive instructions.
Remove all personal items before repossession happens. Prevention saves you hassle later.
What Happens After Repossession in Alabama
You will receive written notice before your lender sells your car. The law requires this notice within a reasonable time. Notice timing is not specifically defined by statute.
Your notice will include the auction time and location for public sales. Private sale notices state when the sale will occur. You can bid on your own car at public auction.
The notice also explains your liability for any deficiency balance. Contact information for redemption and questions will be included.
How Public Auctions Work
Lenders must sell repossessed vehicles in a commercially reasonable manner. Sale prices should reflect average market value. Lenders apply sale proceeds in this order:
- Repossession expenses including towing, storage, and sale preparation costs
- Your remaining loan balance plus late fees, interest, and additional charges
- Subordinate lienholders if any exist
- Co-signers on the loan if applicable
Many borrowers face a deficiency balance. Sale proceeds rarely cover all costs and loan balance.
Consider this example: You owe $5,000 on your car. The lender pays $1,000 in repossession costs. Your total debt becomes $6,000. Your car sells for $4,500 at auction. You now owe a $1,500 deficiency.
Deficiency balances grow larger when you are upside-down on your loan. Owing more than your car’s value creates bigger gaps.
You receive any surplus if the sale exceeds your debt. Such cases are rare.
Do You Still Owe Money After Repossession?
You will likely owe money after repossession. Most borrowers face a deficiency balance.
Your lender sells your car and applies proceeds to your loan. Repossession costs, late fees, and charges get added. The remaining amount becomes your deficiency balance. You are responsible for paying it.
Voluntarily surrendering your car can reduce your deficiency. Voluntary surrender avoids towing, storage, and repossession fees.
Review your loan agreement carefully. Consider consulting with our partner Cambridge Credit Counseling about debt management options. Credit counselors can negotiate lower interest rates and reduced payments.
Can You Get Your Car Back After Repossession?
Your pre-sale notice contains redemption information. Call the provided phone number immediately. Understanding the process and deadlines is critical.
You can redeem your car before the lender sells it. Redemption is also possible before a sales contract is signed. Lenders can require full loan payoff plus late fees. Repossession costs and attorney fees will be added.
Additional Resources for Alabama Repossession Laws
- AlabamaLegalHelp.org provides repossession information and guides to free legal aid in Alabama
- Legal Services Alabama offers legal assistance for questions about lender or repossession company actions
- Federal Trade Commission explains how to avoid repossession and your consumer rights
- Alabama Commercial Code details state repossession laws and borrower rights