The national emergency resulting from the Coronavirus (COVID-19) pandemic will make it hard, if not impossible, for many to make their monthly car payments and could result in increased repossessions. Law Offices of Brandon A. Block will continue to remain open and available to all consumers during the Coronavirus pandemic (though working remotely), and we will update this page as regularly as possible to hopefully provide consumers with insight regarding the impact of the Coronavirus and stay-at-home orders on consumers' car payments and repossessions. We are providing this page as one more tool for consumers. It is not legal advice, and it should not be construed as such.
Lenders are offering various options for consumers right now.
If you can't make your car payment, a prudent first step is to contact your lender, to discuss your particular situation and delaying payments. Certain lenders are offering "forbearance" arrangements, whereby payment due dates are changed or deferred to a later date. The credit entities for major carmakers, including Ford, Nissan, General Motors and Toyota, have stated that they will offer first payment deferrals of between 90 and 120 days to buyers of new vehicles. Ally Financial has published on its website: "You can defer your payment for up to 120 days - finance charges will still accrue, but you won’t be charged any late fees." GM Financial's website states: "In response to COVID-19, we’re here to help. We're waiving late fees on payments due March 1 through April 30, if you can pay within 30 days of the original due date. You do not need to contact us. If you are not able to make that payment before your next payment is due, we will be here to discuss options with you." Hyundai Motor Finance has relaunched its Assurance program, stating on its website: " Hyundai is covering up to six months of payments for Hyundai owners who purchased or leased a Hyundai vehicle between March 14 and April 30, 2020 if they lose their job due to COVID-19 this year."
It is important to learn the various options with your particular lender. Here's a list of some of the major lenders' online updates regarding the impact of the Coronavirus on their dealings with consumers:
- Ally Financial
- BMW Financial
- Capital One Auto Finance
- Chrysler Capital
- GM Financial
- Honda Financial Services
- Hyundai Motor Finance
- Nissan Motor Acceptance Corporation
- Santander Consumer USA
- Toyota Financial Services
- Wells Fargo Dealer Services
Some companies are suspending repossessions.
Bank of America, Chase and Wells Fargo have committed to suspending involuntary repossessions, and Fifth Third Bank has suspended initiating any new repossession actions on vehicles into May 2020. (For a discussion of the difference between voluntary and involuntary repossessions, see our blog post on voluntary car repossessions.) We are informed that bills are being introduced in Congress to suspend car repossessions (along with other types of property foreclosure) for a specified period of time, but none has passed yet. To learn more about the laws related to automobile repossessions, please visit our Car Repossessions page.
Repossessions seem to be precluded by stay-at-home orders in California and elsewhere.
States have taken actions to combat the spread of the Coronavirus which seem to greatly impact the repossession industry. In California, Governor Newsom signed a stay-at-home order requiring all Californians to stay in their place of residence except as needed to maintain continuity of operations of federal critical infrastructure sectors, including the financial services sector. In accordance with the order, the State Public Health Officer has designated a list of “Essential Critical Infrastructure Workers.” As far as the financial services sector, several workers are listed as "essential", but none of them seem to cover debt collection or repossessions.
Can a physical car repossession still happen while the stay-at-home order is in effect? Though this issue has not been litigated in the courts as of yet, the answer strongly appears to be "no", and a repossession while the stay-at-home order is in effect should be deemed a breach of the peace. By not specifically exempting workers in the collection or collateral recovery aspects of the financial sector as "essential", the California stay-at-home order arguably is meant to cease all physical car repossessions, since such activity involves violating the letter of the stay-at-home order (by going outside without being "essential"), as well as the spirit of the order, because could result in in-person contact (which the stay-at-home order is meant to stop).
Other states, like Washington, have issued orders and designations similar to California. Thus, the arguable bar to physical car repossessions could apply in those states, too.
California AB 2501
As of May 28, 2020, California is considering the passage of AB 2501, which would prohibit a servicer of vehicle-secured credit from repossessing mobile homes or motor vehicles during the COVID-19 emergency and for the 180-day period following the emergency, including providing a verbal or written notice of intent to repossess the mobilehome or motor vehicle. A consumer experiencing a financial hardship during the COVID-19 emergency could request forbearance from any vehicle-secured credit obligation, regardless of delinquency status, by submitting a request to the servicer of vehicle-secured credit, either orally or in writing, affirming that the borrower is experiencing hardship during the COVID-19 emergency. A borrower will not be required to provide any additional documentation to receive such forbearance. Servicers would have to provide the forbearance for 90 days, with a 90-day extension at the borrower’s option. Those forbearance periods would continue to be extended upon request of the borrower throughout the duration of the COVID-19 emergency and the 180-day period following that emergency. Servicers also would be required to offer modifications before the conclusion of the forbearance period, and there would be limits on deficiency judgments after the COVID-19 emergency ends. AB 5201 is still working its way through the Legislature.
Last updated: May28, 2020