Vehicle loans are a secured debt most often financed under a Lease Agreement or a Conditional Sales Contract. When a default in the payments occur the lender will pursue collection for the arrears.
When a default occurs and the vehicle loan is financed under a Lease Agreement the lender will seize and sell the vehicle and apply the sale proceeds to the amount you owe. If there is a shortfall, the lender will sue you for the balance that remains owing.
When a default occurs and the vehicle is financed under a Conditional Sales Contract the lender may only pursue one of the two following options, often referred to as “seize or sue“ to recover the amount you owe:
1. The lender may seize and sell the vehicle and apply the sale proceeds to the amount you owe. If there is a shortfall, the lender is unable to sue you for the balance that remains owing; or
2. The lender may sue you for the loan balance that remains owing to obtain judgment. With a judgment the lender can garnishee your wages, seize your bank account or file a lien against your residence. However, the lender is prohibited from seizing the vehicle after a judgment has been granted by the Court.
Vehicle loan putting your debt in overdrive?
The seize or sue provisions of the Law of Property Act can be complicated. Contact Faber to review your finance contract so we can assess your disclosure, options and determine the best restructuring plan is right for you.
Thank you all for making a not so happy time a positive learning experience.Kelvin & Deb J.