Car repossession is a distressing experience that can have long-lasting consequences for individuals facing financial difficulties. It is a process that occurs when a borrower fails to meet the terms of their auto loan agreement.
This failure could be due to missed payments, default on the loan, or other violations of the contract. Once the lender decides to repossess the vehicle, they hire a repossession company to retrieve it.
However, when a vehicle is repossessed, it’s not just the loss of transportation that individuals have to contend with; there are also legal and administrative implications, including what happens to the vehicle’s license plate or tag. So, what happens to your tag when your car is repossessed?
When your car is repossessed, your tag will not be automatically transferred to the lender as it is considered the property of the vehicle owner. However, the tag will be returned to you with which you are required to surrender it to the Department of Motor Vehicles (DMV).
What Happens to Your Tag When Your Car is Repossessed?
Once the vehicle is repossessed, the fate of the license plate or tag depends on state regulations and the lender’s policies.
In many states, the license plate is considered the property of the vehicle owner, not the lender. Therefore, in most cases, “the license plate is not automatically transferred to the lender after repossession”.
However, this doesn’t mean that your license plate remains untouched. In some states, the owner is required to surrender the license plate to the Department of Motor Vehicles (DMV) or equivalent agency once the vehicle has been repossessed. This ensures that the tag is not used fraudulently or in connection with any illegal activities.
Furthermore, in states where the license plate is not automatically transferred to the lender, the borrower may have the option to transfer the plate to a new vehicle or retain it for future use. Whichever one you choose to do with the tags will reflect on your records.
What to Do With Your Tags After Repossession
What to do with your tags after repossession depends on the regulations in your state and the policies of the lender.
However, you can follow the procedure below to ensure your tags are properly taken care of after repossession to avoid them being used for fraudulent or illegal activities.
1. Check Your State Regulations Regarding Tags
Since different states have different laws regarding license plates after vehicle repossession, it’s important to check what your state says to avoid going contrary to the state regulations.
For example, some states may require you to surrender the license plate to the Department of Motor Vehicles (DMV) or a similar agency, while others may allow you to transfer the plate to a new vehicle. Checking your state’s specific rules will help you understand what to do.
2. Contact the Lender
After your car is repossessed and you are stuck with your tags without knowing what to do with them, you can reach out to the lender to clarify their policies regarding the license plate.
Some lenders may have instructions for what they expect you to do with the plate after repossession.
3. Surrender Them to the DMV
If your state mandates the surrender of license plates after repossession, visit the local DMV or relevant agency to return the plates. This is done to prevent the unauthorized use of the plates and to update the records regarding the ownership status of the vehicle.
Trust me, you don’t want to be associated with illegal activities or fraudulent activities on your records because you failed to properly dispose of the tags that were taken off your repossessed car.
4. Transfer the Plate to a New Vehicle
In some states, you may have the option to transfer the license plate to a new vehicle. If you plan to purchase another car, inquire about the process for transferring the existing plate. This can be a convenient option and might save you money on obtaining a new set of plates.
5. Retain the Plate
Some states permit vehicle owners to keep their license plates after repossession. If this is the case, you can choose to retain the plates for future use.
However, even in states where this is allowed, it’s important to verify the procedures and any associated fees.
Be that as it may, it is important to always remember that the steps you need to take vary from state to state, knowing what your state regulation says about tags removed from repossessed cars will help you make the right move.
But in most cases, you’re required to report to the DMV with the tags to either submit them back to them or transfer them to another vehicle of yours. Your records need to be updated. If you surrender the tags and no longer want to use them, your record will be updated.
Conclusion
Vehicle repossession is not something you wish even your worst enemy, but when it comes to that situation, the borrower has to make the right decision in compliance with the law.
As explained in this article, you can either submit the tags back to the DMV or transfer them to another vehicle of yours. Whichever one you choose will go straight to your record.
