New Jersey Repossession Laws: What You Need to Know in 2024

Auto loans are secured loans. Your lender has the right to take your car if you don’t make payments. Lenders do that through a process called repossession.

How Many Payments Can You Miss Without Risking Repossession?

Your lender decides when you’re in default based on your auto loan contract terms. Default usually means you’ve missed a payment. It could also happen if you break another contract rule. Not keeping required insurance on the car is one example.

Some lenders offer a short grace period after the due date. Not all loans include one. Missing even one payment could lead to default in some cases. Once that happens, your lender may have the right to repossess your vehicle. They don’t have to give you a warning first.

Every loan is different. Read your contract carefully so you know exactly what your lender expects. Call your lender directly if you’re not sure when they consider you in default.

Will You Be Notified Before Repossession?

New Jersey lenders are not required to notify you before repossessing your car. Once you’re in default, they can send a repossession company to take your car without warning.

You’re not powerless. Many people call their lender as soon as they realize they’re behind on payments. Ask about your options. Remove any personal belongings from your car if you’re worried repossession might happen soon.

How Can You Prevent Repossession?

Contact your lender as soon as you know you might miss a payment. Tell them you want to keep up with your loan. Explain you’re dealing with unexpected financial difficulties.

Many people are surprised lenders are often willing to work with them. Repossession is expensive and time-consuming. Lenders usually prefer to keep getting payments. That’s true even if it means setting up a new payment schedule. A temporary pause on payments is called forbearance.

Ask whether your lender offers any hardship programs or alternate payment plans. There’s no guarantee they’ll say yes. Reaching out shows you’re trying to make things right. It may help you avoid repossession altogether.

If you’re struggling with multiple debts, our partner Cambridge Credit Counseling can help you create a manageable payment plan with lower interest rates.

What Can Repo Companies Do in New Jersey?

Repossession companies are governed by the Uniform Commercial Code. The UCC says repo companies can repossess your car as long as they don’t breach the peace. Breaching the peace includes:

• Using force
• Threatening or tricking you
• Damaging your property
• Entering your home without consent

What Is Breaching the Peace?

Breaching the peace means crossing the line during a repossession. New Jersey law and the UCC require repossession without causing a disturbance. No damaging property. No threats or force.

Repo agents can’t enter your garage or locked gates without permission. If they do, it’s considered a breach of the peace. Agents can take the car from a public street. They can take it from an open driveway. They can take it from other unsecured areas without asking first. If you verbally object while it’s happening, the agent is supposed to stop.

You must avoid breaching the peace yourself. Don’t block the repo. Don’t hide your car in a locked garage. Don’t physically confront the agent. Trying to stop the repossession could escalate the situation. It could lead to injury or arrest. It adds more fees to your loan balance if the repo company makes multiple trips.

What About Personal Property in Your Car?

Remove personal property from your car as soon as you know you’re at risk. You won’t have to deal with trying to get it back later. The repo man will take your car regardless of what’s in it. They can charge you to store your personal items.

Call the repo company as soon as you can if your car is repossessed with belongings inside. Tell them what property you want to get back. Try calling your lender if they don’t respond. Explain what property you’re missing.

What Happens After Repossession in New Jersey?

The lender will likely sell your car at an auction after repossessing it. The lender is required to sell your repossessed car if you’ve paid more than 50% of the loan balance.

The lender has to give you notice at least 10 days before the sale. The notice includes the auction date and location. You can attend and make a bid if you want. You may have a claim against them if the creditor doesn’t meet the required notice terms. Claims can be filed under the UCC or the New Jersey Consumer Fraud Act.

The lender is required to make a commercially reasonable effort to sell your car. The lender needs to publicly advertise the sale. They need to sell the car for close to market value. You may be able to sue for damages if they don’t. You could use it as a defense in a deficiency hearing.

Do You Still Owe After Repossession?

You might think losing your car means you no longer have to pay the loan. Unfortunately, it’s not that simple. Auction proceeds are paid out in this order:

1. Repossession expenses like repo agent fee, towing, and storage
2. Sale expenses like prepping the car, advertising the auction, and auctioneer fee
3. The balance due on your loan

Repo and sale expenses can add up quickly. They take a big bite out of the proceeds. Avoiding the repo man can come back to haunt you.

Some people choose to do a voluntary repo or voluntary surrender. You voluntarily return the car to the lender before repossession happens. You don’t have to pay repossession fees this way.

Keep any documents you receive in connection with the repo in a safe place. Keep the envelopes if they’re postmarked. The timely, detailed notices the lender must send are part of your legal rights. You could bring a lawsuit against them in court if the lender messes these up. It could cost them the deficiency. It could put them in a position to pay you damages.

Post-Sale Notice

Your lender is required by law to send you a post-sale notice. The notice lists all the costs of the repossession and sale. Ask for the letter if you don’t receive it within one week.

Review the costs closely. Ask for receipts to ensure there are no mistakes. There’s a chance money could be left over after all expenses. It may be owed to you as a refund.

You’ll be left with a deficiency balance if the sale doesn’t cover all the costs. This is likely if you were already upside-down on your car loan.

What Happens if You Don’t Pay After Repo?

Lenders can sue you if you don’t pay the deficiency balance. They often do. The lender will have access to serious collection techniques if they get a court judgment. Wage garnishment is one example.

If you’re sued for a deficiency, our partner Solo can help you respond to the lawsuit and negotiate a settlement.

Trying to negotiate a settlement or payment plan is worth it. You can avoid a lawsuit. Contact your lender to negotiate a settlement before they file a lawsuit.

Can You Get Your Car Back After Repossession?

You may be able to get your car back after it’s been repossessed in New Jersey.

You should receive a Notice of Resale Date after the repo agent takes your vehicle. It’s sometimes called a presale notice. The letter gives you important information about what happens next. It includes how and when you can try to reclaim your car.

Reinstatement is one option that might be available. You can bring your loan current by paying the missed payments, late fees, and any repossession costs. Think of it as hitting a reset button. Your loan picks back up as if you never fell behind.

This option is usually only available for a short window. It’s often as little as 15 days. Not all loans allow reinstatement.

Your loan agreement may limit how many times you can reinstate. In some cases, your lender may include an acceleration clause. They could demand the full remaining balance of the loan. They won’t accept just the overdue amount. You’d need to redeem the vehicle by paying the entire loan off if that’s the case. You can’t just pay the missed payments.

Where Can You Find More Information About New Jersey Repossession Laws?

• Contact the NJ Division of Consumer Affairs – Office of Consumer Protection if you need to file a complaint against a lender or repo company. They have a Guide to Auto Leasing with information about leasing and auto repossessions.
• Legal Services of New Jersey provides free legal assistance for civil matters to low-income individuals.
• The Federal Trade Commission has useful information about vehicle repossessions.