Problem with a Car?

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  • Before Repossession

    If you received a letter or a call notifying you that your car will be repossessed:

    1. Remove all personal items from the car. Once your car is taken, you might have to pay a fee to get your belongings back. Your belongings might also be damaged or even thrown away.

    2. Find all the documents you have about the car, including the sales or financing contract. These contain information that you may need to get your car back. Make sure they are out of the car.

    3. If the seller calls you about the car, write down the person’s name, his/her company, the date and time of the conversation, and what the person said. Ask how much you would have to pay to get the car back.

    4. Do not try to hide your car! Hiding your car or otherwise trying to prevent repossession may deprive you of your legal rights.

    After Repossession

    • Act quickly! You may have the right to get your car back by reinstating your contract and catching up on your late payments – even if you voluntarily surrendered your car. The seller may be required to give you a written

    • Notice of Intent to Dispose of Property (NOI) within 60 days of your car being repossessed. This tells you that you have between 15 and 20 days to reinstate the contract. You can also request 10 additional days to reinstate in writing. The NOI also tells you how much you still owe on the car and what you have to do and how much it will cost for you to get the car back.

    • The seller may try to sell your car at auction and try to sue you for the difference between the amount they sell the car for at auction and the amount you owe them – this is called a “car deficiency lawsuit.”

    • But the seller may not be able to collect on a deficiency suit, if they failed to do the following:

      • Send the NOI within 60 days of the repossession to you and all persons liable on the contract

      • Include any of the legally required information in the NOI, such as:

        • How much you have to pay to get the car back

        • What you must do in order to reinstate your contract

        • How and to whom you provide payment

        • Where you go to get your car back

    If you are served with a summons on a car deficiency lawsuit, you must file an Answer with the court within 30 days. Otherwise, a judgment will be entered against you and appear on your credit report.

    Contact us or another legal services provider if you are served. You may be able to file a counterclaim to get your attorney’s fees.

Get it straight with the State

To take over ownership of a vehicle, you will need:

  • The vehicle’s title (sometimes referred to as a pink slip), signed by the person selling the car. (Their signature is required on Line 1 of the title.)

  • If the seller is not the owner whose name is on the title, you will need a Bill of Sale signed by both the seller and the person whose name appears on the title.

  • A record of the odometer mileage (if the vehicle is less than 10 years old).

    • If the title does not have a line where you can write the mileage information, complete a Vehicle/ Vessel Transfer and Reassignment (REG 262) form. Make sure both the buyer and seller sign the form. Show Citation 11

  • A smog certification.

  • Applicable fees and a use tax.

You can transfer ownership of the vehicle by mailing your completed form to DMV or visiting a DMV field office in person.

THings to know before you buy

A lease is NOT a purchase

A lease is not a purchase, it is more like a long term rental for which you can get financing. Many people come to us for help at the end of their lease thinking that they just finished paying off their purchase because the dealership used the terms “lease” and “buy” interchangeable. Watch out!

It’s important to know that at the end of the lease (two to three years usually) you must return the car. There are limits to how many miles you can drive, and what you can do with the car. If you want to keep the car, you will need to pay a “Buyout price”.

See more from this great article on Bankrate.com.

Cosigning

When you cosign on a car loan, or any loan for that matter, you are just as responsible for the loan as the primary borrower. This means that the creditor can go to you to collect the debt. If you cosign on a car loan, and the primary borrower does not make the monthly payments, you will get collection notices and the debt can be reported on your credit report.

While you do not have a right to possession of the car merely by being a cosigner, your rights as a debtor are the same as the primary borrower, so read the section about about “4. Before and After Repossession”.

GAP Coverage

Gap insurance is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value. Gap insurance may also be called "loan/lease gap coverage." This type of coverage is only available if you're the original loan- or leaseholder on a new vehicle. Gap insurance helps pay the gap between the depreciated value of your car and what you still owe on the car.

This option is first available during your financing meeting when you purchase or lease a car. You can, and should, cancel the coverage once the value of your car is the same or less than what is left owing on the lease or purchase.

Conditions of the Car

When buying a used car, generally the car is sold “As is”. This means that it is sold without warranty or promise of any conditions. Some exceptions are when you specifically add on an extended warranty, or if you purchase a used car that is still within the original warranty of the car, for example, a used car that was previously leased for 3 years will be within the original 7 year warranty if the manufacture offers this.

Also, it is illegal to sell a car that does not have all of its safety features in working condition. See this article for details.

Things to know when you sell your car

Step One: Smog Certificate

A good first step is to determine whether or not you need a smog certificate. When selling a car in California, you must change the title over to a new owner. When you do this through the DMV, you will be required to provide proof of smog certification in the state of California. You will not be required to have smog certification if your car is a hybrid, made before 1975, diesel powered, electric, powered by natural gas and has a GVW in excess of 14,000 pounds, electric, being transferred within a family, or a motorcycle, trailer or vessel. If your vehicle is none of these things, you will need to obtain smog certification. You can do this at most local garages. The garages that provide this service will post it prominently. It is important to note it is the responsibility of the seller to have the vehicle smog certified.

Step Two: Release of Liability

The part of the process with the highest potential for making life harder for you is the release of liability. Filing this paperwork tells the state you are no longer responsible for traffic and parking tickets, registration fees and penalties, or civil litigation resulting from use of your car. In short, if you don't file this release, you may still be on the hook for somebody else's parking tickets or worse. You can download the form from the DMV website here, which you can then mail back to the DMV. You will need to have the vehicle's license plate number, the last five digits of the VIN (Vehicle Identification Number), and the new owner's name and address.

Step Three: Legal Release

The legal release of ownership and transfer of the vehicle requires the signature of the seller. Be aware the seller is responsible for completing the release of liability within 5 days of the date of the legal transfer.

Step Four: Certificate of Title

In California, there is no difference between the legal owner and the lienholder. The final step in changing ownership is submitting the certificate of title to the DMV. The certificate of title is also known as the pink slip. The DMV offers several ways to submit this information. The correct option will have to do with the state of your title, and the conditions of the sale.

Selling your car in California only requires a few extra steps, which have been outlined here. The most exhaustive resource for all car selling in California is the California DMV. Paying attention to the details in this article will save you from being responsible for a stranger's parking tickets, as well as making the sale of your car legally sound.