Updated 8/2014
Before a lender can repossess, or take back your car, you must have used your car as collateral for the loan and you must have defaulted on your contract with the lender. Usually, when you borrow money to buy a car, you have to use the car as collateral. If you do, your contract will say what constitutes a default, allowing the lender to repossess the car. Your rights and the rights of the lender when it comes to default and repossession are laid out in the contract you signed and in state and federal law.
So, make sure you read your contract carefully, especially the part that talks about default. Usually, default is defined as the failure to make a payment when it is due, but many contracts also say that other things may be a default. The most common of these things are: taking the car out of state permanently without permission from the lender, or failing to keep insurance on the car, or damaging the car so that its value is reduced.
If you fail to make a required payment on time, the lender must send you a "Notice of Right to Cure" the default. This Notice can only be sent once you are more than ten days late and it gives you 20 days to catch up your payments. Please note that federally-chartered credit unions are exempt from this law, and many federal credit unions will not send a Right to Cure in all cases.
If you do bring the payments up to date, the default has been cured, and you can continue making regular monthly payments. If you do not bring your payments up to date after you have received the "Notice of Right to Cure," the lender can repossess your car. You only have the right to get one "Notice of Right to Cure" for the entire term of the contract. So, if you get behind in payments again, the lender does not have to send you another "Notice of Right to Cure." Also, if you are in default for a reason other than missing a payment or if you voluntarily surrender the car, the lender is not required to send a “Right to Cure” notice.
The lender can repossess the car in two ways: Either by using self-help or by filing a Claim and Delivery lawsuit. If the contract says that the lender can use self-help to repossess the car, he can tow your car from your driveway, the street or your place of work. The law allows the lender to use self-help in repossessing your car, but the law does require that the self-help be peaceful. If you see someone from the lender hooking up your car to tow it away, you can tell the repossession people to stop. When you tell them to stop, any further attempt to tow the car is not peaceful. If the repossession continues, the repossession people risk liability for wrongful repossession.
Besides self-help, the lender can bring a claim and delivery lawsuit to take back your car. Usually, the lender cannot repossess your car under a claim and delivery lawsuit until the papers are served on you. Also, you usually have a right to a hearing in court before your car is repossessed. However, if the lender has a good reason to believe that you may destroy or hide the car, he can get the judge to allow immediate repossession whether the papers have been served or not.
If your car has already been repossessed, the lender must send you a notice of your Right to Redeem the car and a notice of what the lender intends to do with your car. Both notices usually are included in one letter. Although you have a right to redeem your car from the lender, he can require that you pay off the entire balance of the loan, plus any costs they paid in repossessing your car. Usually you only have about ten days to two weeks to arrange to pay off the car. If you cannot do this, the lender can sell the car and apply the money to your loan.
In the notice of what the lender intends to do with your car, the lender tells you that the car will be sold at private or public sale or that the car will be kept as full payment of the loan. If you have paid 60% of the original loan amount, you have a right to make the lender sell the car within 90 days of the repossession. This is important when you have nearly paid off the car before the repossession because if the lender sells the car, he must use the money received to pay costs of the sale and to pay off the loan. Anything left over must be paid to you.
If your car has been repossessed when the loan is still rather new, sale of the repossessed car may not bring enough money to pay off the loan. The money that is still owed on the contract is called a deficiency balance. A lender can sue you for the amount of the deficiency balance. If the lender sues you for a deficiency balance, he may also be able to require you to pay attorney's fees, repossession costs, repair or clean-up costs, and court costs. If the lender gets a judgment against you for the deficiency balance, the judgment will appear on your credit to pay off the deficiency judgment.
If a claim and delivery or a deficiency action is brought against you, you may be able to raise certain defenses. These defenses include the failure of the lender to give you one of the required Notices, the failure of the lender to sell the car in a commercially reasonable manner, or even a breach of warranty by the manufacturer or seller in some cases. If you do not have one of these defenses, you may still be able to file bankruptcy and keep your car until the bankruptcy court says otherwise. Even if you file bankruptcy, in order to keep the car, you must pay for it.
For more information on auto repossessions, visit the Department of Consumer Affairs website at www.consumer.sc.gov or call 800-922-1594.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Updated 9/2014
There are two types of warranties that may come with the purchase of both new and used cars: express warranties and implied warranties. Express warranties are warranties that apply to specific items or the performance of the car. They can be written or oral, but they must be communicated to the buyer in some way. Most express warranties are in writing and may come in special packages, but all express warranties do not have to be mentioned in the special package. An express warranty can be created by a description of the car. For example, if the contract describes the car as a 1988 Spitfire, the dealer or manufacturer is warranting that it is what the contract says it is. If the car is in fact, a different model or a different model year, the express warranty has been breached.
While an oral representation by the dealer or a salesman may be an express warranty, you should not automatically assume that such a representation is a warranty. The representation may be considered by the courts as nonspecific or mere "puffing." For example, if the salesman says, "This car is a real cream puff," he has made no direct representation about the car's performance and the statement is not a warranty. Also, even if the salesman makes a more specific statement, it may be difficult to prove the statement was actually made. Further, the written warranty will often state that the written warranty is the only warranty and oral representations are not a part of the contract or the warranty.
Almost every new car and many used cars come with some type of written warranty. You should take the time and the effort to read and understand exactly what is covered and what is not covered under the warranty. You should also understand whether it is the dealer's duty or the manufacturer's duty to make any repairs covered by the warranty.
Understand that an extended service contract is not a warranty. Both a warranty and a service contract may require someone to repair problems with the car, but they are not the same. A warranty is an affirmation of fact or a "promise" about the performance of the car and is a part of the sale. An extended service contract is a separate contract and is sold for an additional price.
Implied warranties apply to the sale by law. There are three types of implied warranties: the warranty of title, the warranty of merchantability, and the warranty of fitness for a particular purpose.
The warranty of title says that the dealer or manufacturer has good title to the car and can transfer this title to the buyer. This warranty also says that the car does not have any liens that the buyer has not been told about.
Under the implied warranty of merchantability the dealer or manufacturer warrants that the car is fit for the ordinary purposes for which cars are used, that it is fit for driving. Minor problems, such as a broken automatic door lock, may not be considered as a breach of this warranty.
Under the implied warranty of fitness for a particular purpose, the dealer or manufacturer warrants that the car is fit for a specialized purpose. For this warranty to arise, the seller has to know what the specialized purpose is for which the buyer wants the car and that the buyer is relying on the seller's skill or judgment in recommending something fit for that purpose.
Most dealers and some manufacturers put clauses in their contracts that try to limit warranties or prevent them from being given. These clauses are called disclaimers. The law allows them to use disclaimers, but they must do it properly. Express warranties cannot be disclaimed. Implied warranties of fitness for particular purpose can be disclaimed if the contract provides clearly and conspicuously that all implied warranties of fitness for particular purpose are disclaimed. You should read all disclaimers in the contract before signing it.
You need to be especially careful when buying a used car because the warranties are more likely to be limited or disclaimed completely. Federal law requires dealers to give basic warranty information on a window sticker that must be placed on the used car. If this sticker says the car is sold "As Is," the dealer is giving no warranty at all. This means that the dealer does not even warrant that you can drive the car off the lot.
For more information, you may want to read Extended Warranties and Service Contracts below.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Updated 8/2014
South Carolina has a lemon law that applies only to new vehicles. This law protects consumers who purchase or lease a new car, if the new car turns out to be defective. New means: (1) the vehicle was sold to a dealer by the manufacturer, (2) it was only used for test drives and (3) title has not been issued. A new car is considered to be a lemon if it meets three conditions. The first condition is that the car’s problems or defects show up within the first twelve months or the first 12,000 miles, whichever comes first. The second condition is that the problem causes a lot of trouble with the car's use, market value or safety. The third condition is that the manufacturer or dealer cannot repair the car within a reasonable time.
Under this law a reasonable time is considered to be either three attempts to repair the same problem or loss of use of the car for thirty or more days when the car is being repaired. The thirty days do not have to be in a row. They can be the total days out of service.
Even if the car meets all of these requirements, it still will not be a lemon if the problem was caused by your abuse, neglect or unauthorized alteration of the car. Alterations are not just repairs, they are adding something to the car or making changes in the car. So if you plan to have alterations made in your new car, be sure to have the manufacturer or dealer make the alterations or have the manufacturer approve them before they are made.
If your new car is a lemon, the manufacturer must do one of three things. The manufacturer must either repair the car, replace the car or take it back and refund your money. The manufacturer, not you, has the choice of whether to replace the car or to take it back and refund your money.
To get repairs, replacement, or a refund, you may have to do several things yourself. First, you must give the manufacturer notice of the problems with the car within the 12-month/12,000 mile time period. Giving notice to the dealer where you bought the car is not the same as giving notice to the manufacturer. You will be better off if you give this notice in writing. Second, you may have to give written notice to the manufacturer that the car has not been repaired during previous attempts and you are giving final written notice to get the car repaired. You will have to give the manufacturer this final chance if the manufacturer mentioned or put in writing the final chance to repair at the time you purchased the car. This final chance gives the manufacturer an extra ten business days to repair the car. Third, you must go through any arbitration procedure the manufacturer uses. Arbitration is an informal procedure set up to help resolve disputes. This procedure is usually faster and cheaper than court. The arbitration procedure should not cost you any money. Also, a decision will usually be made within forty days. Any decision made in the arbitration proceeding is binding on the manufacturer, but if you are not satisfied you can still file a law suit. If you do go to court to force the manufacturer to replace the car or to take it back and refund your money and you win in court, you may also be entitled to recover court costs, reasonable attorney's fees and any expenses that were caused by the car's problems.
When you buy or lease a new car, it is important to buy only from reputable dealers. Read everything carefully, especially the warranty, and keep all papers and receipts. Also, when repairs are made under a warranty, you should keep a log of the repair attempts. Each repair should be noted by dates, times, the types of repairs requested and so forth. Any failure to make a requested repair should be noted, along with any statements made by the service department employees.
If the lemon law does not cover the car you leased or purchased, you may still have rights under general sales and warranty laws. You can also file a complaint with the Department of Consumer Affairs at www.consumer.sc.gov or by calling 1-800-922-1594.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Updated 9/2014
Nearly everyone has had an unpleasant experience in buying or maintaining an automobile or knows someone who has. Also, nearly everyone knows of cars that have given years and years of trouble-free service. To protect your legal rights and ensure that your purchase will meet your needs and provide minimal aggravation, you need to take certain steps both before and after the purchase.
As with any major purchase, the watchphrase is "take your time and do it right." Before you go into an automobile dealership, know just what sort of vehicle you need. If you need an all terrain vehicle, a sleek sports car will not serve your purpose, and vice-versa. Do you need the vehicle for family transportation? Is gas mileage a major factor? Consult Consumers Guide and other automobile magazines, which are available at the public library or at a newsstand, to get a basic price range. It never hurts to specifically ask the dealer if the car has ever been wrecked, particularly if it is a used car.
Comparison Shop
Be prepared to make a few visits to dealerships without committing to a particular deal. You may be overwhelmed with innumerable makes, options, financing deals and so on, so make certain you are comparing apples with apples. Remember that the salesman is in business to make sales, not to have you go home and carefully analyze your options, so be prepared to simply say you are not ready to buy yet. Here are some areas to give particular attention:
Window stickers - Federal law requires that new cars contain window stickers revealing both the estimated gas mileage and the number and costs of factory installed extras.
Usually the total sticker price will include a built-in profit margin recommended by the manufacturer, so the dealer may be willing to sell for less. It may be possible to have the car ordered with only the extras you want and no more, although this may take longer. If the window sticker has been altered or defaced, the dealer may be violating the law and may be trying to hide information. Beware of stickers that look like the manufacturer's sticker but merely add on items such as undercoating. These are products the dealer wants to sell at a higher cost. If the vehicle does not already contain such options and the dealer indicates that you must buy them, the dealer may be violating state law.
Financing deals - Often dealers advertise low Annual Percentage Rates or low monthly payments to encourage you to buy from that dealership. Make sure you understand the total amount you will pay. Never focus only on monthly payment. Low monthly payments may be no bargain if they are to be paid for a long time. Low interest rates are not bargains if another dealer will sell for a much lower cash price to begin with. Library publications will tell you exactly what the vehicle and various extras cost the dealer. Start with the dealer's cost and bargain up from that price rather than down from the dealer's sticker price. Remember that all extras, including insurance or service contracts, cost money. Also, review your credit report before you start shopping. You can check your report for free at www.annualcreditreport.com.
Advertisements - If an advertised special sounds too good to be true, it probably is. Advertisements may range from confusing to outright misleading with small print, as well as vacation offers and other "free" offers. Beware of the outlandish offer.
Warranties - Before you make a final decision, be sure you understand what the warranty covers, and more importantly, what it does not cover. On used cars, the law requires that a description of the warranty be disclosed on a window sticker. If the sticker says "as is" the dealer makes no warranty. He is not even guaranteeing you can drive it off of the lot. You may want to read about Automobile Warranties above.
If the salesman promises you anything, make sure he writes it down and it is signed by the dealership. If they will not write it down, the dealership likely will not honor the promise. Any sort of statements about the quality of the vehicle should also be made in writing, such as the car has never been wrecked, the mileage is correct and the car has only had one owner, etc.
By now you should have done your homework. Once you sign a contract, you have an obligation to pay. Although some people think so, there is no three-day right to rescind automobile sales. No such automatic rescission rights exist.
Many times a defect in a car will not show up until it has been driven for a while. If you believe your car is defective or that certain repairs need to be made, follow this procedure:
- First, re-examine your warranty terms. The warranty will describe in detail your rights and those of the dealer and manufacturer. Sometimes dealers and manufacturers disagree on who has the responsibility to make a particular repair, and you may need to remind them what the warranty says.
- Second, give the dealer a chance to correct the problem. Explain what is wrong with the car in as much detail as you can, but do not make assumptions about what is mechanically wrong unless you are sure you understand the problem. Do not act with anger or hostility. Just ask the dealer what he will do to fix the car and when it will be finished.
- Third, keep a record of everything. This includes repair invoices, labor statements, letters and even old parts when practical. Be able to show all your efforts to get your car repaired and your complaint resolved.
- Fourth, use the informal dispute resolution procedures that are available. These procedures are a special type of arbitration used to help resolve car problems. Check the phone book to see if your city has a Better Business Bureau to help you resolve complaints. Call the South Carolina Department of Consumer Affairs. The telephone number is 803-734-4200 in the Columbia area, or 1-800-922-1594 for other parts of the state. These organizations may be able to help resolve your complaint to your satisfaction.
- Fifth, try a consumer action board. This board is another type of arbitration procedure. Your new car warranty should contain a toll free number for contacting the consumer appeals board to help settle disputes for your particular car. Such a board may be made up of a single arbitrator or a panel of three or more arbitrators. That is, they cannot work for the dealer or manufacturer. If the appeals board rules in your favor the ruling may be binding on the dealer, but if it rules against you it is not binding on you. However, you may be required to use such a board before you can pursue your other legal rights, so read your warranty information carefully.
- Sixth, if necessary, consult a private attorney. Even if none of the above steps solves your problem, you may still have legal rights that can be used. If the dealership refuses to, or cannot repair the car, the dealer or the manufacturer may have violated the written warranty. The defect may also amount to a breach of the warranties implied under the law. Also, the salesman and the dealership may have defrauded you, or the defect may be caused by a misrepresentation about the condition of the car or an understatement of the car's actual mileage because the odometer has been tampered with. Your attorney can help you understand your legal options, but you will need to discuss the practical side of pursuing your remedies. Sometimes it is not worthwhile to pursue a legal remedy you may have, especially when your recovery will not exceed the expected costs. So, you should discuss this with your attorney.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
Updated 9/2014
When you buy a new car, and often a used car, the dealer may try to sell you an extended warranty or a service contract to give you more protection than the manufacturer's warranty. The manufacturer's warranty usually covers the car for the first 12 months or 12,000 miles. Extended warranties and service contracts are not true warranties. They are repair or maintenance contracts that you have pay extra to get.
In deciding whether to pay for an extended warranty or service contract, you need to consider several things. You need to know exactly how much the contract will cost you. The selling price of service contracts varies from $100 or $200 up to $600 or $700. The total cost of the service contract usually includes a deductible amount that will not be covered. Some contracts require a deductible amount to be paid for every repair attempt. Others require the deductible to be paid for each unrelated repair.
Once you know the cost, you need to find out what the service contract covers. To make this determination you will need to check it against the manufacturer's warranty. Does it give more protection than the manufacturer's warranty? Does it give less protection that the manufacturer's warranty? Look at exactly what the service contract covers. Some service contracts only cover major parts like the engine and the power train. Very often small items such as gaskets and seals are excluded from the coverage. If they are excluded, you will want to know whether something like engine trouble will be covered if it is caused by a problem with the gaskets or seals.
Another thing you will need to consider is who is responsible for the repairs under the contract. Sometimes the service contract is administered by the manufacturer. If the manufacturer is responsible for covering the repairs under the warranty, you can generally rely on it having the money to meet the claims. However, many of the contracts are administered by independent service contract companies. The reliability of these companies varies. Some of these independent service contract companies can demonstrate financial responsibility to meet claims. Others may not be able to do so. At this time there are no registration requirements or financial responsibility requirements that must be met before service contracts can be sold. The best way to check on a particular company is to contact your local Better Business Bureau or to call the South Carolina Department of Consumer Affairs. The phone number for Consumer Affairs is 734-4200 in the Columbia area and 1-800-922-1594 from other parts of the state. You may also access information on the website at www.consumer.sc.gov.
Another thing you need to consider is how the repairs are handled. How many places are authorized to make the repairs? Do you have to get permission before any repair work will be covered? Does the company administering the service contract have a toll-free number for you to call? You also need to consider how the repair bills are paid. Are the repair bills paid directly to the mechanic or do you have to pay the repair bills and request reimbursement?
If you travel, you will also need to consider whether the service contract provides you with an authorized repair place in another part of the state or in another state. Some service contract companies offer nationwide service, others do not.
If you have purchased an extended warranty or a service contract and have trouble getting the company to respond, you can file a complaint with the Better Business Bureau or with the Department of Consumer Affairs. These organizations may be able to help resolve your problems. If they cannot you may need to file a lawsuit in court. However, you do need to remember that the law concerning warranties does not apply to service contracts. The law concerning contracts will govern any such lawsuit.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. The number is 803-799-7100.
This information was prepared to give you some general information on the law. It is not intended as legal advice about any particular problem. If you have questions about the law you should consult a lawyer. If you do not know a lawyer, you can call the South Carolina Bar Lawyer Referral Service weekdays between 9 a.m. and 5 p.m. at (803) 799-7100.