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Basic auto repossession laws in Minnesota

All states have their own laws when it comes to repossession of automobiles, and it's important to know that it is allowed, as long as it's done peacefully, under Minnesota law. This is governed by Minnesota State Code Sec. 336.9.

If you default on your car loan, that gives the creditor the right to take the vehicle back in order to sell it, lease it, or dispose of it in any other reasonable manner. This can be done through a private sale or a public sale. Generally, lenders are just looking to cut their losses and will attempt to sell off used vehicles, though they may not get as much for them as was owed on the loan, considering how fast the value of a car can fall.

However, you may have a right to redeem the car before that sale takes place. You'll need to pay off what is owed in back payments and any reasonable expenses that the creditor experienced. For example, perhaps you missed payments because you're a business owner yourself, and you weren't paid promptly by a third party. If you then do get paid before the repossession, you may turn around and pay the creditor so that you don't lose the vehicle.

After a repo, if there is still a deficiency, you may be liable for it. Likewise, if there is a surplus, that may be owed to you by the creditor.

Understanding the state laws is only the first step if you're facing repossession. You also need to know what legal steps to take to protect yourself and your property.

Source: Minnesota Legislature, "2016 Minnesota Statutes," accessed Feb. 21, 2017

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