The specific terms of a vehicle loan are unique. Your income and credit score, the amount you have for a down payment and the price of the vehicle will all influence the terms for financing a motor vehicle. The one term that is consistent is that the vehicle itself is usually the collateral for the loan.
Although your name is on the title, there is also an official record of your financing arrangements that allows your lender to take legal action against you if you fail to make payments. Repossession of a vehicle will cost you whatever you have invested in that vehicle and potentially your only way to get to your job reliably.
What does the repossession process in New Jersey involve?
You have to fall behind on your payments
State law does not impose a specific waiting period for a lender to repossess your vehicle the way that it does for foreclosure on someone’s primary residence. A lender can potentially foreclose on your home when you have only missed one payment.
The terms of your loan may outline the company’s policies regarding repossession. If not, you need to realize that missing payments might lead to aggressive collection efforts, possibly including repossession.
The lender does not have to notify you beforehand
One of the most persistent myths related to vehicle repossession is the mistaken belief that lenders must notify you in writing before they take your vehicle away. Neither New Jersey state law nor federal statutes require written notice from a lender intending to repossess a vehicle prior to doing so.
However, they will need to file paperwork with the state of New Jersey following the repossession and will need to notify you in writing about the repossession after it occurs.
You have the right of redemption
It is common for repossessed vehicles to go for sale at a vehicle auction, but the lender cannot send the vehicle straight from your driveway to a sale where someone else can purchase it. Before the lender can resell your vehicle, they will have to hold it to offer you an opportunity for redemption.
If you are able to pay off the remaining balance owed on the loan, you can get your vehicle back instead of losing it permanently.
Bankruptcy can prevent repossession
If someone with a financed vehicle falls behind on their loan payments, repossession is likely unless they know they will shortly regain control over their finances. Filing for bankruptcy before the lender repossesses your vehicle could help you protect the money that you have invested in it by protecting you from collection activity.