According to reports from Business Standard, missing one EMI does not automatically trigger immediate vehicle repossession. As explained by Keyur D. Gandhi, managing partner at Gandhi Law Associates, lenders typically issue reminders and notices before invoking the repossession clause under the loan agreement. Shashank Agarwal, founder of Legum Solis, noted that loan agreements generally contain clauses related to default notices and recovery action, with banks and financial institutions unable to classify a loan account as non-performing asset until there are three continuous defaults or non-payment for at least 90 days according to RBI circulars.
As reported by Business Standard, vehicle loans are secured through hypothecation agreements where lenders have security interest in the asset until repayment. Vipul Jai, partner at PSL Advocates & Solicitors, emphasized that recovery has to follow law, not muscle power, with borrowers entitled to proper communication and notice requirements. Supriya Majumdar, partner at Elarra Law Offices, advised borrowers to not ignore legal notices from lenders to avoid lack of defence and explore early dispute closure opportunities. Recovery agents cannot use threats, harassment, or coercive methods, with borrowers entitled to fair and dignified treatment throughout the process.
According to Business Standard reports, borrowers may still settle dues and reclaim vehicles before auction, subject to loan terms. Rakesh Kumar, founder and MD of Square Insurance Broking, warned that the biggest mistake borrowers make is avoiding communication, as early engagement with lenders often helps resolve issues before repossession. However, once vehicles are auctioned to third parties, recovery becomes nearly impossible, making quick settlement attempts essential during the repossession period.
As reported by Business Standard, borrowers have specific rights during recovery proceedings, including the right to receive proper notice of default and consequences. Majumdar advised borrowers to record important details during any possession action, including vehicle condition and inventory preparation. If sale proceeds exceed outstanding dues, excess amounts must be refunded to borrowers, while if sale amounts are lower than loan amounts, lenders may still recover remaining balances. Experts recommend borrowers verify recovery agent identities, document harassment attempts, and explore settlement options before matters escalate.
