Question

Jennifer made a $2,000 down payment on a new car. She financed the

remaining $8,500 through First National Bank. She stopped making
payments after she had paid $4,000. First National repossessed the car
and sold it for $5,500. Can the bank keep the excess of the net
proceeds? Who should receive the excess funds?

Answer 1

After repossessing and selling Jennifer's car, First National Bank is required by law to return the excess funds to her after deducting the remaining loan balance and any associated fees.

Step-by-step explanation:

Jennifer made a $2,000 down payment on a new car and financed the remaining $8,500, but stopped making payments after paying $4,000. First National Bank repossessed the car and sold it for $5,500. According to typical repossession and secured loan laws, the bank cannot keep the excess of the proceeds after paying off the remaining loan balance and any fees associated with the repossession and sale of the vehicle. Instead, the excess funds should be returned to Jennifer, who is the original borrower.