When an automobile is purchased by use of financing then this financing usually takes one of two forms. The first form is in terms of a loan. The second form is in terms of a lease. There are significant legal differences between a loan and a lease. And these differences do affect the car drivers’ rights as to the vehicle. Sufficing to say that regardless of the financing if payment is not made then the automobile will be repossessed and sold.
As with any secured loan, the borrower must always concern themselves with the prospect of owing their lending or their leasing company more money after the automobile has been sold. Automobiles depreciate in value very quickly. If you buy a new car then the car immediately begins to depreciate once you drive it off the car lot. If the lender repossesses and sells the automobile for more money than what is owed on the underlying loan or a lease then the lender will not pursue the borrower for any additional money. Unfortunately when automobiles sell at an automobile auction they seldom sell for a price sufficient to pay the outstanding balance owed on the underlying financial obligation (loan / lease) the general rule is that the borrower or lessee is obligated to pay these sums of money. However, there are exceptions to this rule. What’s important to note is that the borrower/lessee is every bit in a position where they’re having to find an exception to this rule otherwise they can be held liable for any additional money owing on the underlying loan or lease.
There are laws that regulate the process by which a lender can repossess and sell the underlying automobile. If these laws are not followed then often the lender is precluded from recovering any additional money. If you have had an automobile repossessed and a bank is contacting you asking you to pay additional money then I would love the opportunity to talk to you to determine whether or not you have an obligation to pay that remaining balance. Again if the lender or leasing company has not followed California law with regard to the proper process by which they are to repossess and sell the vehicle then they are not entitled to recover any money from you. Notwithstanding this preclusion they may still try. If you find yourself in one of these situations then please give us a call and I will be happy to talk to you to see whether or not I can be of any assistance.