In the United States, repossessions are carried out pursuant to state laws that permit a creditor with a security interest in goods to take possession of those goods if the debtor defaults under the contract that created the security interest. Being "in default" means that the debtor has failed to fulfill his or her obligations under the contract. states have enacted additional laws that apply specifically to the repossession of purchased and leased automobiles, and which are intended to afford additional consumer protections.
The most common forms of default resulting in repossession are failing to make required payments and failing to maintain adequate insurance coverage. Typical requirements include mandating that auto lenders provide consumers with opportunities to either "reinstate" or "redeem" their purchase or lease contracts after their vehicles have been repossessed.
Thus, an agent who elects to do this may be subject to arrest for the violation of criminal traffic laws which apply to insurance requirements.
Repossession does not necessarily satisfy the loan.
Repossession, colloquially known as "repo" for short, is a "self-help" type of action in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings.
The property may then be sold by either the financial institution or third party sellers.
This tactic has been deemed unlawful by numerous courts.
There is nothing legally preventing a creditor with a security interest from repossessing the goods if a payment is late (even if it is only one day overdue), unless the lender has agreed otherwise as a binding term of contract.
The only exception to this rule is if the creditor does or says something to lead the debtor to believe that the goods will not be repossessed notwithstanding a late payment. makes a "oral contract", or orally modifies the terms of a written contract.) If a creditor tells a debtor that a payment may be made a particular number of days late, and then repossesses the goods before that date, the creditor is guilty of conversion (i.e., civil theft).
If there is a match, they will attempt to hook up the car to the tow truck and tow it away or pick the lock and drive it away.
However doing so does not absolve the repossession agent's requirement to be covered under an active insurance policy for the vehicle under the applicable criminal traffic laws.