Boats are valuable possessions and owners may need a boat loan to obtain one. Legally, a boat is considered a vehicle like a car, motorcycle or RV, and treated the same in the case of repossession. When you take out a loan for a boat, the bank retains interest in that boat until you make the last payment. When you can't make payments, you need to know what the possibilities are in regards to repossession.
Laws in each state vary, and in many vehicle repossessions do not require any grace period, or written warnings. Even when they are not required, companies do prefer giving warnings so you can clear up the problem. Lenders do not want the hassle of repossessing a boat. It is even more expensive to repossess a boat than a car, because on top of paying a repo agent, and hauling expenses, the boat may also have to be taken out of the water.However, your boat can be repossessed the minute you miss a payment. The only time a warning, or a grace period is required is when it is stipulated in the contract for your lending agreement.
Curing the Loan
While every state is different, in most a loan company must allow you to cure the default and catch up to your payments plus extra fees, or penalties if you contact them before a repossession, or even after the boat is seized. They are not required to go to extraordinary means to help you, but if you talk to your loan company, they may be willing to tack on missed payments to the end of the loan, or take smaller amounts added to your monthly payments until the loan is caught up.
Getting it Back
There are three ways to get your boat back if it is repossessed. The first way is to pay the defaulted portion of the loan plus all fees, penalties and repossession charges. Some states do not demand loan companies allow that type of rectification after the vehicle is repossessed, so check your contract, or your state's laws to see if it applies to you. In those states that do allow payment of the defaulted portion, the loan company must reinstate the original loan terms if the amount due is paid along with fees and penalties, even after repossession. The second way is not common, but it is possible: you can attend the repo auction and buy your boat back. You will still be responsible for the deficiency balance. The deficiency balance is the difference between what the boat sold for and the amount you originally owed, plus fees, penalties and other charges. The third way is to pay the entire amount of the loan, all penalties, fees and repossession charges.
Like with cars, it is not against the law for a repossession agent to enter your property uninvited to snatch the boat.
Repossession companies must notify law enforcement of a current repossession within one hour of the act. The company must also inform the owner within 72 hours that the vehicle was repossessed.
Once your boat is repossessed you are still legally allowed to travel to where it is stored, board it and retrieve your personal possessions. Some states demand that the loan company inform you of what items were on the boat, and where you can get them. If the boat is sold before you get your stuff, and the loan company does not return your items stored on the boat, you may be able to sue for compensation. You will need some sort of verification of the items you had on the boat. Pictures are a good source of proof.
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