Repossession Laws in New Jersey

Since auto loans are secured loans, the lender has the right to take your car if you don’t make your payments. Lenders do this through a process called repossession.

How Many Payments Can I Miss Without Risking a Repossession in New Jersey? 

In New Jersey, your lender decides when you’re in default based on the terms in your auto loan contract. Default usually means you've missed a payment, but it could also happen if you break another rule in the contract, like not keeping the required insurance on the car.

Some lenders offer a short grace period, giving you a few extra days to make your payment after the due date. But not all loans include this. In some cases, missing even one payment could lead to default. Once that happens, your lender may have the right to repossess your vehicle, and they don’t have to give you a warning first.

🔎 Since every loan is different, it’s important to read your contract carefully so you know exactly what your lender expects. If you’re not sure when your lender would consider you in default, many people choose to call their lender directly to ask.

Will I Be Notified Before the Repossession? How?

In New Jersey, lenders don't have to notify you before repossessing your car. Once you're in default they can send a repossession company to take your car without warning.

That can feel overwhelming, but you're not powerless. Many people choose to call their lender as soon as they realize they’re behind to ask about their options. If you're worried repossession might happen soon, it's also a good idea to remove any personal belongings from your car just in case.

How Can I Prevent a Repossession?

It can feel discouraging to know your lender has the right to take your car, but you're not without options. One of the most effective steps is to contact your lender as soon as you know you might miss a payment. Let them know you want to keep up with your loan but are dealing with unexpected financial difficulties.

Many people are surprised to learn that lenders are often willing to work with them. Repossession is expensive and time-consuming, so lenders usually prefer to keep getting payments — even if that means setting up a new payment schedule or a temporary pause on payments, known as forbearance.

You can ask whether your lender offers any hardship programs or alternate payment plans. While there’s no guarantee they’ll say yes, reaching out shows that you’re trying to make things right and may help you avoid repossession altogether.

What Can Repo Companies in New Jersey Do? 

Repossession companies are governed by the Uniform Commercial Code (UCC). The UCC says repo companies can repossess your car or render it unusable as long as they don't breach the peace, which 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 — either by the repo agent or by you. Under New Jersey law and the Uniform Commercial Code (UCC), a repossession must be done without causing a disturbance, damaging property, or using threats or force.

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

It's also important to know that you must avoid breaching the peace yourself. That means not blocking the repo, hiding your car in a locked garage, or physically confronting the agent. Trying to stop the repossession could escalate the situation, lead to injury or arrest, and add more fees to your loan balance if the repo company has to make multiple trips.

What About the Personal Property in My Car? 

The best thing you can do when it comes to your personal property is to remove it from your car as soon as you know you're at risk of a repo. This way you don’t have to deal with trying to get it back. The repo man will take your car regardless of what’s in it, and they can charge you to store your personal items.

Call the repo company as soon as you can and let them know what property you want to get back. If they don't respond, try calling your lender and explain what property you're missing.

What Happens After a Repossession in New Jersey? 

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

🗓️ The lender has to give you notice of the auction date and location at least 10 days before the sale so that you're able to attend and make a bid if you desire. If the creditor doesn’t meet the terms of the required notice, you may have a claim against them under the Uniform Commercial Code or the New Jersey Consumer Fraud Act. 

The lender is also required to make a commercially reasonable effort to sell your car. This means the lender needs to publicly advertise the sale and sell the car for close to market value. If they don’t, you may be able to sue for damages or use this as a defense in a deficiency hearing. 

Do I Still Owe After a Repossession in New Jersey? 

You would think that if the lender takes your car, that would at least mean that you no longer have to pay the loan. Unfortunately, it’s not that simple. When your car is sold, the proceeds of the auction are paid out in the following order:

1. Repossession expenses (repo agent fee, towing, storage, etc.),

2. Sale expenses (prepping the car for sale, advertising the auction, auctioneer fee, etc.), and finally

3. The balance due on your loan. 

Repo and sale expenses can add up quickly and take a big bite out of the proceeds from the sale of your car. This is one reason why avoiding the repo man can come back to haunt you.

To avoid extra fees, some people choose to do a voluntary repo or voluntary surrender. This simply means that you voluntarily return the car to the lender prior to (and to avoid) repossession. This way you don’t have to pay repossession fees.

🗄️ Keep any documents you receive in connection with the repo in a safe place. You may even want to keep the envelopes if they’re postmarked. This is because the timely, detailed notices the lender must send are an important part of your legal rights. If the lender messes these up, you could bring a lawsuit against them in court. It could cost them the deficiency or even 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 that lists all the costs of the repossession and sale.  Don't hesitate to ask for the letter if you don't receive it within a week of the sale of your car.

👀 Review the costs closely and ask for receipts to ensure there are no mistakes. This is a good practice in general, but there’s also a chance there could be money left over after all expenses and the balance has been paid. If there is, it may be owed to you as a refund.

If the sale of your car doesn’t cover all the costs on the list, then you’ll be left with a deficiency balance. This is likely to happen if you were already upside-down on your car loan.

What Happens if You Don't Pay After a Repo?

Lenders can, and often will, sue you if you don't pay the deficiency balance. If they get a court judgment for the deficiency, the lender will have access to serious collection techniques like wage garnishment.

This is why it’s worth trying to negotiate a settlement or payment plan to avoid a lawsuit. You can contact them to negotiate a settlement before they file a lawsuit

Can I Get My Car Back After a Repossession in New Jersey? 

In some cases, you may be able to get your car back after it's been repossessed in New Jersey.

📄 After the repo agent takes your vehicle, you should receive a letter called a Notice of Resale Date (sometimes called a presale notice). This letter gives you important information about what happens next, including how and when you can try to reclaim your car.

One option that might be available is called reinstatement. This allows you to 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.

⏳ However, this option is usually only available for a short window, often as little as 15 days, and not all loans allow reinstatement.

Your loan agreement may limit how many times you can reinstate, and in some cases, your lender may include what's called an acceleration clause. This means they could demand the full remaining balance of the loan instead of just the overdue amount. If that’s the case, you’d need to redeem the vehicle by paying the entire loan off, not just the missed payments.

Where Can I Find More Information About Repossession Laws in New Jersey? 

• You can 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 also have a Guide to Auto Leasing if you have questions 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.