Can a Car Be Repossessed if the Buyer Dies?

If you want an inherited car, pick up the payments.
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When someone dies, the family has many important issues to manage. Unfortunately, debts are eventually among those issues. The lender of a car loan can repossess a vehicle if payments stop. You can prevent this by notifying the loan company of the buyer's death and taking necessary steps to continue payments. The loan becomes a debt owed by the estate of the deceased person just like other debts, such as credit or mortgage obligations.

Handling Debt Matters

Preventing repossession of the car depends on who inherits the property and what you and other members of your family want to do with it. The property of the deceased usually goes through probate, a court proceeding to properly distribute assets, unless the person had a trust that immediately transfers property to someone else. Probate can take months, so you and the family have to deal with debt matters in the meantime.

Loan Obligations

Secured debts include mortgages and car loans. You need to pay them off to avoid foreclosure or repossession. Companies might ask for copies of the death certificate when you contact them about payment issues. The person who inherits the car becomes responsible for the loan payments, or a co-signer of the loan would have to pay it off. Financial matters might also depend on the deceased’s will or trust instructions. The will or trust could direct debts be paid through the executor or trustee managing the estate. All debts, including the car loan, would be handled either during probate or according to instructions for the trust.

Payment Options

If you don’t have instructions through a will or trust and you inherit the car, the payments become your responsibility. The decision on payments might depend on your financial means or whether or not you want the car. The estate might provide you with enough money to pay off the debt in full, or you could sell other assets in the estate to make payments. If you decide the car is worth less than the outstanding amount due, you could ask the loan company to repossess the car.

Contacting Loan Company

The loan company could have the car repossessed if it is not notified of the situation. You might be able to have the loan transferred to your name, but it’s best to discuss this with a loan representative. Check all documents related to the loan to find out about payment obligations. In some cases, the deceased owner might have signed a loan agreement that makes arrangements to pay the car off in the event of her death.

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