Car Repossession in Canada: What Lenders Can Do, by Province

Miss a car payment in most of Canada and the lender can legally take the car back, without a court order and without warning you first. What happens next depends on your province. In British Columbia, taking the car wipes out the rest of the loan. In Ontario, the lender can sell the car and sue you for whatever the sale doesn’t cover. In Quebec, it has to give you 30 days to catch up before it can take the car at all.

Below are the car repossession rules in every province and territory: when a judge has to approve the repossession, whether you still owe money afterwards, and how to get the car back. If the car is still in your driveway, the section on what to do before the lender takes it is near the end.

How many car payments can you miss before repossession?

There’s no set number. Your contract defines what counts as a default, and one missed payment can be enough. Outside Quebec, no province makes the lender warn you or wait. Ontario’s government says a bailiff “does not have to give you advance notice” (opens in a new tab) before repossessing, unless your contract requires it.

Read the default section of your contract. It can list more than missed payments, such as letting the insurance lapse, and it may let the lender demand the whole balance at once.

Quebec is the exception. Before a lender can take the car back, it has to send you a written notice, and you then have 30 days to catch up on the missed payments or return the car. The details are in the Quebec section below.

Car repossession rules by province

Most provinces let a lender repossess without going to court and then sue you for whatever the sale doesn’t cover. Two kinds of rules change that. Look for them in your province’s row: a point after which a judge has to approve the repossession, and a rule that ends the debt once the lender takes the car.

Several of these rules apply only to dealer financing. That means a contract where the dealer sells you the car and lends you the money, even after it passes that contract to a bank or a carmaker’s finance company. A loan straight from your bank or credit union isn’t dealer financing, so check who your contract names as the seller and the lender.

“Twice a year” is the limit on a loan longer than a year, which covers almost every car loan. On a shorter loan, it’s twice in total. Manitoba, and the territories on dealer financing, also require a written notice within 48 hours after the car is taken.

How does car repossession work in Ontario?

In Ontario, a lender can repossess your car as soon as you default, through a bailiff or its own employees, and it doesn’t need a court order unless you’ve paid two-thirds on dealer financing. It then has to give you 15 days’ written notice before selling the car, and it can sue you for any shortfall.

Who can take the car

Only a bailiff or assistant bailiff licensed under Ontario’s Bailiffs Act (opens in a new tab) can repossess a car on someone else’s behalf. A finance company or dealer can also do it itself through its own employees, but it can’t use independent contractors. A tow truck driver who shows up alone isn’t allowed to take the car unless they’re licensed as a bailiff too, according to the province’s rules for bailiffs (opens in a new tab).

The repossession has to be peaceful. Bailiffs generally can’t use force or threaten it, and they must leave if you tell them to. If they stay, you can call the police, and the repossession is no longer considered peaceful. Anything you left in the car has to be made available to you, generally for free.

You may have to pay for the repossession itself. Towing, storage and bailiff fees can be added to what you owe if your contract allows it.

The two-thirds rule, and who it covers

Once you’ve paid two-thirds or more of what you owe under the agreement, Ontario’s Consumer Protection Act, 2002 (opens in a new tab) (s. 25) stops the lender from repossessing without permission from the Superior Court of Justice. The court can refuse, or attach conditions. It’s the closest thing Ontario has to a repossession loophole, and it only covers some buyers.

It applies to dealer financing, and it still applies after the dealer passes your contract to a bank or another lender, which Ontario’s Registrar of Bailiffs (opens in a new tab) has told every bailiff in the province. It doesn’t apply to a loan straight from a bank or credit union, which a regulation (opens in a new tab) leaves out, or to a lease.

Handing the car back doesn’t get around it. A voluntary surrender “does not, in and of itself, override” (opens in a new tab) the two-thirds rule, according to a 2022 bulletin. A new Consumer Protection Act, 2023 (opens in a new tab) has passed, but it isn’t in force and Ontario hasn’t named a date. Its version of the rule covers the same contracts.

After the car is taken

Before the car is sold, the lender has to give you at least 15 days’ written notice under the Personal Property Security Act (opens in a new tab) (s. 63). The notice has to say what it would take to get the car back, list the lender’s costs and the sale date, and warn you that you may still owe money after the sale.

Until the sale, you can get the car back in one of two ways (s. 66). You can pay off the whole loan plus the costs. Or you can pay only the missed payments and the lender’s reasonable costs, and fix any other default, which puts the loan back in place. That second option is available once per loan, unless a court allows more.

If the car sells for less than you owe, you’re liable for the difference, and if it sells for more, the extra is yours (s. 64). The lender may instead offer in writing to keep the car in exchange for the debt, and if nobody objects within 15 days, the loan is treated as paid. Once you’ve paid 60% of the loan, though, it can’t keep the car that way. It has to sell it within 90 days, unless you agree otherwise after the default (s. 65).

How is car repossession different in Quebec?

Quebec is the only province that makes the lender warn you first. It has to send you a written notice, and you then have 30 days to catch up on what you missed. It can’t take the car without your consent or a court process carried out by a bailiff, and if a dealer takes the car back, you don’t owe the rest of the loan.

If you financed the car through the dealer

If your contract says the dealer keeps ownership of the car until you’ve paid for it, it’s an instalment sale, and Quebec’s Consumer Protection Act (opens in a new tab) sets the rules, even if the dealer has passed the contract to a lender.

Before taking the car back, the dealer has to send you a notice in the form set by regulation (s. 139). You then have 30 days from receiving it to catch up on the missed payments or give the car back, and the car can’t be taken before those 30 days are up (s. 140). If you return the car or it’s taken, your obligation under the contract ends. You owe nothing more, and the dealer keeps the payments you’ve already made (s. 141).

If you’d already paid at least half of the total, counting the down payment, when you fell behind, the dealer needs the court’s permission to take the car (s. 142). If the court says no, you keep the car, and it can change your payment schedule (s. 144). The Office de la protection du consommateur (opens in a new tab) explains the notice and your options.

If a bank or caisse lent you the money

If a bank or caisse lent you the money and took a movable hypothec on the car as security, the Civil Code (opens in a new tab) applies instead. The lender has to serve you a prior notice and register it. Because the loan is a consumer contract, you have 30 days from registration to hand over the car (art. 2758). Until the car is taken in payment or sold, you can stop the process by paying what’s overdue plus the costs (art. 2761).

If you don’t hand over the car, the lender has to go to court (art. 2765), and a bailiff carries out the judgment. What you owe afterwards depends on what the lender does next. If it takes the car in payment, the debt is wiped out (art. 2782), but it needs the court’s authorization for that if you’d paid half or more of the loan when the notice was registered (art. 2778). If the car is sold instead, the price goes against the loan and you can still owe the difference. If the car is worth more than you owe, you can require a sale within the 30 days, so that any surplus can come back to you. You first have to register a notice, repay the lender’s costs and advance the cost of the sale (art. 2779), and a court can still let the lender take the car in payment (art. 2780).

If you lease the car

A lease of four months or more gets the same written notice and 30 days. Once the car goes back, the lease ends. The leasing company keeps the payments it has already received and can only claim the damages the end of the lease actually causes it (s. 150.15). On a lease with a guaranteed residual value, it needs the court’s permission to take the car if you’d already paid at least half of the total lease payments, counting the down payment, when you fell behind (s. 150.32). You can also return a leased car at any time yourself, with the same result (s. 150.17).

Which provinces stop the lender from suing once it takes the car?

British Columbia does for any car loan. Alberta, Saskatchewan, Manitoba and the three territories do when the financing came from the dealer, and so does Quebec after a dealer repossession. These are seize-or-sue rules: the lender can take the car or sue you for the money, but not both.

British Columbia

BC’s rule is the widest in the country. Under the Personal Property Security Act (opens in a new tab) (s. 67), if a lender seizes a car you use for personal or family purposes, or accepts it when you hand it over, what you owe under the loan is extinguished, and so is any guarantee a co-signer gave. If it sues you for the money instead and later has the car seized to enforce the judgment, it can’t collect more than the car sells for. A court can set the rule aside if you damaged the car on purpose or recklessly.

BC has its own two-thirds rule too, and it covers every lender. Once you’ve paid at least two-thirds of the loan, the lender can’t seize the car without a court order (s. 58). Anyone who repossesses for a lender as a business needs a bailiff licence under the Business Practices and Consumer Protection Act (opens in a new tab), and a bailiff can collect the money from you instead of taking the car.

Alberta and Saskatchewan

Both protect financing from the seller only. In Alberta, the Law of Property Act (opens in a new tab) (ss. 51 to 54) says that once a seller who financed the car takes it back, no claim can be made for the price, and a lender that buys the dealer’s contract gets no more rights than the dealer had. A contract term that waives this is void. In Saskatchewan, the Limitation of Civil Rights Act (opens in a new tab) (s. 18) limits a seller who financed the car to taking it back and selling it. Neither rule covers a loan from a bank or credit union, so that lender can still sue you for the shortfall. In both provinces, the protection can be lost if you damage the car on purpose or neglect it.

In Alberta, a lender can’t send its own staff. Only a licensed civil enforcement agency can repossess under the province’s Civil Enforcement Act (opens in a new tab), and you’re served a notice of seizure when it does. Saskatchewan’s notice and 30-day wait before a seizure apply only to listed household appliances, such as stoves and washing machines, not to cars.

Manitoba

Manitoba’s Consumer Protection Act (opens in a new tab) goes further than Alberta’s and Saskatchewan’s rules. Its seize-or-sue rule (s. 47) covers a credit sale, meaning financing from the dealer or the manufacturer, or from a lender the dealer arranged for you. Two more rules apply to every lender. Once you owe less than 25% of what you borrowed, the lender can only repossess with a court’s approval or your written consent at the time (s. 44). And within 48 hours of taking the car, it has to send you a written notice that sets out what you’re behind and how to get the car back, and the car can’t be sold for 20 days (s. 45). If you pay the arrears, the default charges and the lender’s costs, the seizure stops (s. 33.8).

The territories

Yukon, the Northwest Territories and Nunavut have seize-or-sue rules for a time sale, their term for a car the seller financed. Once the seller takes the car back, it can’t sue you for the balance. Once less than 25% of the cash price is still owing, the seller also needs a court’s permission or your written consent at the time to take it. After a repossession, you get a written notice within 48 hours, and the seller has to hold the car for 20 days so you can catch up or pay it off.

A loan secured by a chattel mortgage on the car has a similar protection. Once less than 25% of the original debt is still owing, the lender needs the court’s permission to repossess (s. 57 in Yukon, s. 67 in the Northwest Territories and Nunavut).

What happens after the car is sold?

Where no seize-or-sue rule applies, the lender sells the car, puts the money toward your loan and its costs, and can sue you for any shortfall. That’s the case in Ontario, in Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador, and for a loan straight from a bank in Alberta, Saskatchewan, Manitoba and the territories. The Atlantic provinces give you at least 20 days’ notice before the sale and let you catch up to get the car back, up to twice a year.

A shortfall becomes an ordinary debt. If you don’t pay it, the lender can sue, and a court judgment is what lets a creditor garnish your wages. The shortfall can be large if you owe more than the car is worth. The FCAC example in our cost of owning a car guide is $7,725 underwater one year into a $35,000, eight-year loan.

Should you give the car back voluntarily?

It can save you the towing and bailiff fees, but it doesn’t change much else. Handing the car over still counts as a repossession under most of the rules above. In Ontario, it doesn’t get around the two-thirds rule. In BC, it ends the debt just as a seizure would. Outside the seize-or-sue cases, you still owe whatever the sale doesn’t cover.

Before you hand it over, ask the lender to confirm in writing what you’ll owe afterwards. In Quebec, a voluntary surrender also lets a lender with a hypothec keep the car without the court’s approval it would otherwise need once you’ve paid half (art. 2778), so think twice if the car is worth more than you owe.

What to do before the lender takes the car

Call the lender before you miss the payment, not after, and ask what it can offer, such as moving the due date or deferring a payment. Get any change in writing. Keep the insurance up to date while you sort it out, since a lapse can be a default of its own.

If you can’t keep the car, think about selling it yourself before the lender takes it. You avoid the repossession fees, and if the car is worth more than the loan, the difference is yours. If it’s worth less, you’d have to cover the gap to pay off the loan when you sell. In BC, and on dealer financing in the other seize-or-sue provinces, a repossession wipes out that gap instead, so selling it yourself mainly makes sense when the car is worth more than you owe.

If the car payment is one of several debts you can’t manage, a licensed insolvency trustee can tell you whether a consumer proposal would help. Any shortfall after a repossession can go into one.

Getting one payment ahead

One missed payment can be enough to start a repossession in most provinces, so having one payment set aside is real protection. It’s also the kind of goal that’s easy to put off.

Lodavo is a free app that rewards you for setting that payment aside. Connect the savings or chequing account you already use, and the bigger your balance, the more tickets you get in a weekly cash draw. Every week someone wins at least $100, and you could win up to $10,000. The money never leaves your own account.

Download Lodavo free on the Apple App Store (opens in a new tab) or Google Play Store (opens in a new tab) and start earning tickets while you get ahead on your payments.

This article is general information, not legal advice. Your rights depend on your province, your contract and who financed the car, so check your own case with your province’s consumer protection office or a lawyer.

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