What is repossession?

When you borrow against goods, the lender usually holds a security interest registered on the Personal Property Securities Register (PPSR). Repossession enforces that interest when you breach the loan contract. Common triggers are missed instalments, using the asset in a prohibited way, and failing to keep it insured or the paperwork current. Typical secured goods are cars, utes, vans, trucks, trailers, tractors, excavators and business equipment such as POS terminals and medical gear.

A lender can only repossess where the contract and the law allow it. For contracts regulated by the National Credit Code, that usually means a default notice first, with time to remedy the default. Voluntary surrender is an alternative that can reduce repossession costs but often still leaves a deficiency. Agents cannot use force, make threats, breach the peace or enter locked premises, and they can only take goods covered by the security agreement.

Land and mortgages are enforced through court processes or power-of-sale provisions under state or territory law, and lenders commonly need a court order to take possession. Goods under a registered security interest can often be repossessed without court proceedings, provided the repossession is peaceable and the contract or law permits it. That makes repossession of cars and equipment much quicker in practice than mortgage enforcement, and where a loan is secured over both land and goods, different rules and timelines can apply to each.

You are entitled to notice of the default and usually of the sale, including how the proceeds will be applied. Before the goods are sold, most contracts let you reinstate the loan by paying the arrears, default fees and reasonable repossession costs, or redeem the goods by paying the full outstanding balance plus costs. Lenders set a firm period for this, so ask for a written figure with an expiry date and payment instructions.

After sale the lender must account for the proceeds, showing how they were applied to interest, fees, costs and principal. Any surplus is refunded to you; any shortfall is a deficiency you, and any guarantor, still owe. If the repossession was unlawful, remedies include a civil claim, compensation or a complaint to AFCA, and criminal conduct such as threats or theft can be reported to police.

Repossession is expensive. Agent and transport fees, storage while the lender holds the goods, auction and advertising costs, default fees and legal costs if court action follows are all added to the balance. Guarantors remain liable even after the goods are taken, may have to pay the deficiency, and can ask for account statements and details of the repossession and sale.

Default and repossession entries usually go on your credit file and can affect future lending for several years. If you receive a default notice, contacting the lender early, asking for a hardship variation where the difficulty is temporary, documenting every conversation and getting free help from a financial counsellor are the practical first steps.