If you bought a car on finance, the creditor probably has a 'security' over the car. The 'security' means the car is listed on the Register of Encumbered Vehicles (REVS) and you are not allowed to sell it without the creditor's permission.

Read your finance contract to find out your rights and obligations. If you fall behind in car repayments the creditor should post you a "Section 80 Notice" telling you how much you are behind and giving you 30 days to get the payments up to date. If you don't get the payments up to date the creditor may repossess the car. Repossession may involve the creditor taking the car from your home, place of work or wherever it may be parked. The costs of repossession will be added to the debt.

What can I do?

• Contact the creditor and explain your circumstances. Seek more time or whatever you need. Don't promise something you cannot fulfil. Creditors often push consumers into promising more than can be done, and then become angry when the promise is broken.
  
• See a financial counsellor.
  
• Make an offer to the creditor.
  
• Sell the car. Perhaps you can get by with a cheaper model or without a car.
  Apply to the Fair Trading Tribunal to have the contract varied under s.66 Consumer Credit Code. This may involve a temporary moratorium on payments or reducing the amount of each payment, and extending the term of the loan contract.
  

What happens after repossession?

After repossessing the car, the creditor should send you a notice under section 94 of the Consumer Credit Code with an estimate of the value of the car. You have 21 days from the date of the notice to pay the stated amount and get the car back or nominate a purchaser who offers to pay the estimated (or a greater) amount for the car.

If you do nothing, the creditor will sell the car and you will be liable for the balance of the debt. Note that the creditor might sell the car for less than the estimated value, so letting the creditor sell the car is very risky.

DISCLAIMER The information provided in this information sheet is of a general nature only, and is not intended to be legal advice. There may be errors or inaccuracies or the information may not be completely up-to-date. Always check the information provided before relying on it. The information relates to consumer law in New South Wales, Australia.