Legal Question in Credit and Debt Law in Arizona

I currently reside in Arizona & have my vehicles registered with the State of Arizona. I work with Arizona Federal Credit Union (AZFCU), which I have three separate car loan and a line of credit. I have had one vehicle repossessed, paid another off and owe $ 3200.00 on the final car loan. The credit line I owe $500.00. The final vehicle loan is current & the line of credit is current. AZFCU is refusing to lift the lien on the paid off vehicle. They indicate that since they are a credit union, they have the right to do this. Is that true? Do I have any recourse to secure a clear title on the paid off vehicle?

Asked on 5/28/11, 11:57 am

1 Answer from Attorneys

Christy Thompson Thompson & Faas, Attorneys at Law

Credit Unions in Arizona have the unique ability to make you collateralize your assets with the loan they are lending to you. What this means is all of your debt must be paid off before your car will be released. Typically, your loan contract with a Credit Union will state they have the right to collateralize all of your loans and by taking a loan with them, you are agreeing to these terms. Rarely does a person understand these terms when they are signing their loan documents. If you don't remember them advising you that this was one of the terms of the loan it could be that they didn't explain it to you.

So, you must pay all the debt before they release the car. Check your loan documents to see if you have agreed to these terms. Hope this helps.

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Answered on 5/31/11, 8:53 am

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