Iowa Repossession Laws

by Wadia Whalen
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Vehicle repossession involves a lender retrieving property from a debtor who has not made a scheduled, contracted payment. Once the debtor has failed to pay, the loan moves into default status, and the lender has the option to repossess the car under certain circumstances. Voluntarily surrendering a car--if the debtor can’t afford the default payment--may save you from additional fees for the repossession. Iowa law offers protection for thelender and the debtor during the process of a vehicle repossession.


The lender may repossess the vehicle as long as it does not cause a breach of peace, such as any physical confrontation or verbal intimidation, and he has sent the Right to Cure letter to the debtor 20 days prior to the repossession. The letter must be clearly addressed to the debtor and state all contact information for the lender, the defaulted amount on the loan and the due date. During the 20 day period the debtor may pay the defaulted amount which will halt the repossession.

Redeeming the Vehicle

Iowa law allows the debtor, at any time before the lender disposes of the vehicle through sale or other means, to recover it by paying the entire defaulted amount of the loan. If the creditor has not yet disposed of the vehicle, but has entered into a contract to do so, the vehicle is no longer eligible for redemption by the debtor.

Sale of the Vehicle

If the debtor fails to pay the defaulted amount of the vehicle, the lender has the right to sell it at any time or place that is commercially reasonable. A commercially reasonable sale includes a fair market value price for a private sale. If the sale results in an amount that is higher than the contracted price for the debtor, she is entitled to that surplus amount. If there is a deficiency in the amount of the sale, the debtor is responsible for paying that amount.

Personal Possessions

Any personal items belonging to the debtor that were in the car at the time of repossession must be made available to him by the creditor. The license plates belong to the debtor, and he may use them for another vehicle within 30 days. If he hasn’t used the plates for another vehicle within 30 days, he must return them to the county treasurer.

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