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Let's say someone wants to sell a car to an individual via seller financing.. The individual puts down 1,000$ and finances the other $3,000.. and agrees on monthly payments of 200$ the seller becomes a lean holder on the vehicle..and the seller an the buyer sign the standard paperwork saying the car title is not transferred to the buyer until everything is payed in full...

Now the individual does not make payments a few months in.. can the seller repo the car? report it as stolen? What legal recourse does the seller have ?

This should all be hypothetically in the united states in the state of Pennsylvania.

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    What is specified in the contract that all involved parties have signed?
    – WPNSGuy
    Commented Mar 1 at 1:40

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Let's say someone wants to sell a car to an individual via seller financing.. The individual puts down 1,000$ and finances the other $3,000.. and agrees on monthly payments of 200$ the seller becomes a lean holder on the vehicle..and the seller an the buyer sign the standard paperwork saying the car title is not transferred to the buyer until everything is payed in full...

Technically, the money lender - Alice Bank LTD - gets a big lien on the car, the title has a note about it and that it can't be sold or transferred without the lien being paid by the new owner - Bob. Only once the Lien is paid off, the remaining rights of the title (transferring the car) are transferred to them.

Now the individual does not make payments a few months in.. can the seller repo the car? report it as stolen? What legal recourse does the seller have ?

The lien does not go away - it's still Alice Bank LTD's lien. But by not paying the fees, Bob is in breach of contract. The contract can stipulate, that Bob can cure his late payment within timeframe X without problems. After that timeframe, the contract typically stipulates that the bank can recover their property. That can happen in multiple ways:

Bob could drive to the bank, hand over the keys, and then figure out how much he still owes Alice Bank Ltd with a representative, and how/when to pay that back. That amount is whatever portion of the lien isn't yet paid off and can't be recovered by selling the car to someone else.

Alice Bank LTD could just outright sue Bob for the outstanding balance of the loan, demanding either the outstanding balance or the car and any amount not recovered from its sale in court.

If Bob does not deal with the bank and ignores letters, a typical escalation step is called repossession. Re-possession is the return of possession over the car. The term comes from the fact that Bob is, before the repossession, in actual possession of the car. Possession means the control of an item. The return of control over the car only changes to the bank if the bank can pick up the car. Usually, that happens because Alice Bank LTD sends someone to tow the car to a dealer, and has the keys collected. After getting the car back, Alice Bank LTD can sue for the costs of repossession, outstanding fees, and whatever amount is still missing from the loan balance after they sold the car.

Even if the car can't be located Alice Bank LTD is not out of options. While they wait, other information might surface to the Bank. If this information substantiates a report for Fraud, the bank will report this to the Police. This is especially true if the bank finds out that Bob gave them falsified numbers in the loan application. Instead of a tow company, the cops might appear on Bob's porch, asking where the car is and investigating a crime.

All the while, not paying the loan rates is something that Alice Bank LTD has to report to credit rating agencies. Bob's credit rating will be tanked.

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  • can the lienholder report the car as stolen? Commented Mar 4 at 0:08
  • @user55665484375 Is the lienholder the owner until they foreclosed and a court said they are?
    – Trish
    Commented Mar 4 at 7:11

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