Can a car dealership refuse to accept payment to bring a loan current due to the condition of a vehicle?

UPDATED: Jan 4, 2012

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Can a car dealership refuse to accept payment to bring a loan current due to the condition of a vehicle?

Asked on January 4, 2012 under Bankruptcy Law, North Carolina


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Good question. Whether or not the lender for a vehicle that is security for the loan can refuse payment on a delinquent loan due to the vehicle's poor condition depends what the loan and the security agreement state on the subject signed by the lender and the borrower.

Absent any agreement mandating the good condition of the security for the loan, it would appear that the lender has to accept the tender of the late payment by the borrower. Good business practice would be that the payment should be accepted and then the borrower would be required to put the security in better condition.

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