Missouri Title Loan Repossession Laws – What You Need to Know Before You Owe

Consumers who have bad credit and own their vehicle, may often consider a title loan when in a financial crunch. However, before placing your vehicle up as collateral for a loan, it’s important to consider the consequences if you fail to repay it. By Missouri law, failure to repay the loan entitles the lender to repossess the vehicle, but there are specific policies lenders must abide by during the repossession process.

According to the Division of Finance, which regulates Missouri title loan companies, the loan must be 10 days past due before any action can be taken. So a late payment that is only 5 days past due, will not result in repossession or the threat of repossession.

Once the loan is 10 days past due, the lender is required to send out the “Notice of Default and Right to Cure.” This notice states the payment amount due and the deadline to make the payment. It also gives a warning that failure to make payment by the deadline could result in the lender exercising their right to repossess the vehicle.

Missouri law requires that the deadline to make the payment be a minimum of 20 days. Allowing customers at least 20 days to cure the default, after the loan is 10 days past due, provides Missouri residents a minimum of 30 days to make payment. Compared to other states, this is a considerable length of time to remedy a default.

During the course of the loan, if the borrower is late making payment a second time, the lender is required to wait 10 days and then send out a “Second Notice of Default and Right to Cure.” This notice provides the same information as well as the same 20 day grace period as the first notice, but there is one additional warning. The warning states that if the borrower is late a third time, they will not receive another notice, nor will they be entitled to “cure the default.”

Failure to make payment after the grace period will result in repossession of the vehicle. Missouri regulations require lenders to send borrowers notification that they intend to sell the vehicle and then allow at least 10 days for the borrower to repay the loan in full and thereby redeem the vehicle. If the borrower fails to redeem the vehicle after 10 days, then the lender is entitled to sell the property.

Lenders are entitled to the profits from the sale of the vehicle in order to cover the unpaid balance of the loan and other financing expenses. Title loan companies can also use the proceeds from the sale to cover their repossession costs, or any other repairs or expenses associated with the vehicle.

However, Missouri law protects borrowers in that lenders who have covered their expenses from the sale of the vehicle, are required to “return the excess funds to the customer.” Conversely, if there is a deficit amount after the sale of the vehicle, the borrower is required to pay that amount in full. Lenders are also entitled to charge interest on this amount.

Some Laws To Protect Your Automobile

People tend to face numerous issues with respect to their automobiles. Some of the most common problems that people face are –

• Buying a defective car and getting refused a refund, fixing and replacement by the manufacturer.

• After completing a final loan contract, you are asked to sign a new contract with higher down payment.

• You are trapped with deceptive advertisements and you have been sold a more expensive car.

• Dealer conceals optional add-ons and undervalues the trade-in during fixing of the deals.

• Your car is repossessed without your consent by the creditor.

Know Your Rights

There are different laws that save the consumers from auto fraud. Here is a list of various laws and their scheme of protection.

Magnuson-Moss Warranty Act

This law is utilised when a contractor, warrantor or supplier denies complying with a service contract, written warranty or implied warranty.

State Repossession Laws

These laws state that –

• Your car cannot be removed from a locked garage by the car repossession company without your consent.

• You can put your car up in auction or you can pay the full money in order to buy back the car.

• On paying repossession costs or reinstating your loan, you can get your car back in some states.

• Your car must not be sold below market value.

• You should be informed whether the creditor will put the car up for auction or not.

State Lemon Laws

Those cars are dealt by lemon laws that have been repaired many times for the same defect. Different states have different lemon laws.

• Your car should be replaced or refunded by the manufacturer for a substantial defect after four tries.

• Your car should be refunded or replaced for a safety defect after two tries.

Truth in Lending Act (TILA)

According to TILA, interest rates and other information regarding the loan should be disclosed by the lenders before processing a loan. You can get the best auto financing rate with the help of TILA.

Unfair, Deceptive, or Abusive Acts or Practices (UDAP)

You are protected by UDAP from deceptive, unfair and false acts including the false advertisements.

Contacting an Attorney

You should know about the following, if you want to contact an attorney.

Repair Record

Keep record of the timing of the car when it is out for service and keep track of the repair attempts. Every time you repair the car, do not forget to submit a dated and written list of problems to your dealer.

Notice Required

Before entitling to a replacement or refund, you must go through the notice requirement of your state.

Your Refund or Replacement

Ask the manufacturer for a replacement or refund only after confirming that your car is qualified as a lemon. You may have to go through arbitration if a valid arbitration program is incorporated into your written warranty, in order to get your replacement or refund.