Can Suncoast Credit Union use Right of Setoff to deduct from my account without notice after repossession?

Question

I have an auto loan with Suncoast Credit Union and recently did a voluntary repossession because the car's transmission was broken. They sold the car and applied the sale proceeds to the car loan. However, I noticed that they recently took a payment from my account without notifying me. When I contacted them, they mentioned "Right of Setoff" as the reason for the deduction. Is this allowed even without my authorization?

James L. Arrasmith · Answer

When a financial institution like Suncoast Credit Union has a "Right of Setoff," it means they can use funds from your accounts with them to cover any outstanding debts you owe. This right typically applies if you have a loan, like an auto loan, and your account holds a balance with them. It doesn't require prior notice unless specifically stated in your agreement or required by law. 
 
In your case, since you had an auto loan with Suncoast and the vehicle was repossessed, they likely applied the proceeds from the car’s sale to your loan balance. If there’s still an outstanding balance or if the sale didn’t cover the full amount owed, they can use the Right of Setoff to deduct from your account to recover those funds. 
 
Even though they didn’t notify you before the deduction, the Right of Setoff is a standard clause in many loan agreements. If you feel uncomfortable with how it was handled or believe the amount taken was incorrect, you can review your loan terms or speak with Suncoast Credit Union for more clarity on the deduction and how it was applied.

Q: Can Suncoast Credit Union use Right of Setoff to deduct from my account without notice after repossession?