If you are delinquent on your vehicle loan or your case has been seized and auctioned off, it is time to seek legal help. We can review your individual circumstances and help you understand all of the debt relief options available to you. The quicker you contact us, the sooner we can provide you with the help you need.
What is a deficiency balance?
You are probably aware that your vehicle starts to lose its value as soon as you drive it off of the dealer’s lot. Thus, when your auto lender repossesses your care and sells it, the proceeds from the sale are rarely enough to pay the full amount of what you owe on the loan. This means that there is a deficiency balance left due and you are usually still obligated to pay it.
How does the auto auction work?
Each state has its own laws governing how secured lenders can sell repossessed collateral. Generally speaking, the lender is typically required to provide you with a written notification that your car will be sold. The notice will list the date, time and location of the auction or other type of sale. The borrower should also be informed of whether he or she will remain liable for any remaining deficiency balance, as well as how the borrower can find out how much is still owed on the loan.
Asset sales can be private or open to the public. A private sale is conducted for certain parties who the lender believes will be interested in buying the collateral being sold, while a public sale is open to anyone. Private sales are only allowed in certain circumstances, but many cars are routinely sold at private sales to auto dealers. If the sale notification fails to inform you of the date or location of the sale, you should contact the lender and request that the information be given to you. A borrower has the right to attend either type of sale of his or her own vehicle.
What does “commercially reasonable” mean?
The lender must sell a repossessed vehicle in a ‘commercially reasonable’ manner. There are numerous interpretations of this standard, but because most car sales are primarily attended by used car dealers, the bids are low and the sales are still considered to be commercially reasonable. This means that most borrowers are left owing a pretty substantial deficiency balance.
How is the deficiency balance calculated?
When the sale has ended and your case has been sold, the sale price is subtracted from the total amount you owe on your vehicle loan. The remaining amount plus the expenses incurred by the lender in seizing, storing and selling the vehicle are added together for the total deficiency balance.
If you have questions about your auto loan or a deficiency balance, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.