Have you bought or rented a motor vehicle? If you can’t meet the terms of the loan agreement, the loan company may take back (repossess) your vehicle.
In that situation, Massachusetts has laws protecting you. The company has to notify you before it takes back your vehicle and has to give you time to catch up on your payments. It is also only legal for loan companies to take a car as peacefully as possible.
At the same time, you should know that some repossession requirements can vary depending on if you bought the car or rented (leased) the car.
How does repossession work with a rented/leased vehicle?
If you can’t meet the terms of your loan agreement for a leased vehicle, you don’t have the same protection as for a bought vehicle. The loan company is not required to let you know before they take back your vehicle. But, you should take a look at your lease agreement(s) to see if there are any unique requirements.
If you have questions or concerns about a leased vehicle that was taken back by a loan company, the Attorney General’s Office may be able to help. Please contact our Consumer Advocacy & Response Division (CARD) at (617) 727-8400 for more information.
What are my rights if I fall behind on my payments on a bought/financed vehicle?
When you buy a vehicle using a loan, you agree to specific requirements and to paying down the loan on a regular schedule. Usually, your payment will include a fixed “principal” payment as well as interest on the loan.
If you fall behind on your loan payments and can’t keep up with them, you should contact your lender to talk about your options.
What kind of notification do I have to receive from my lender before they can repossess my bought/financed vehicle?
Before a lender can repossess your car, you have to get a notice that follows these requirements:
- The notice can only be sent 10 days after default
- The notice has to have exactly this title: “Rights of Defaulting Buyer under the Massachusetts Motor Vehicle Installment Sales Act”
- The notice has to give you 21 days from the mailing to catch up on your payments to avoid repossession. This is called the “default cure” period.
- The due date must be on the notice
- The notice has to tell you the amount due
If you previously got notice of default 3 or more times, the lender doesn’t need to provide any more notices before repossessing your vehicle.
What rules does my lender have to follow?
Once the period to catch up on your payments has passed, the lender can repossess your vehicle, but they have to follow these guidelines:
- The repossession agent can’t use force or threats when repossessing the collateral.
- The person sent to get the vehicle is not allowed to go onto your owned or rented property unless you allow it. But, if your car is parked on the street next to your property, the person doesn’t need to have your consent.
- Repossession from other public or private locations is usually allowed as long as the repossession agent does not “breach the peace.”
- The person sent to get your vehicle has to tell the police department in your city or town about the repossession within 1 hour of the repossession.
What can I do after my vehicle is repossessed? What are my rights?
If a lender takes your vehicle, you still have rights.
- The lender has to let you claim all of your personal property that might have been on or inside the vehicle. Note that the person sent to take back your car is allowed to charge a reasonable fee for holding your property.
- The lender must tell you how much money is needed to pay back your loan. They have to give you 20 days after the day your vehicle was repossessed to pay that amount of money and get the vehicle back. The amount you owe is usually the same as the remaining amount of money on the loan, combined with any reasonable fees assessed by the lender for things like towing, storage and repossession.
- The lender can only re-sell your vehicle for a commercially reasonable price.
- If the difference between the sale price and the amount owed plus reasonable fees is less than $2,000, the lender is not allowed to attempt to collect that money from you. Any amount over the $2,000 the lender is allowed to collect.
- When the lender sells your vehicle again, if the sale price is greater than the amount you owed, the lender has to give you difference, or profit, they made in re-selling the car.
What do I do if I have questions, my vehicle is about to be repossessed, or I think repossession happened in a way that was unfair or illegal?
The Attorney General's Office is ready to receive formal complaints against lenders and repossession agents who may be violating the law. You may file a consumer complaint or contact our Consumer Advocacy & Response Division (CARD) at (617) 727-8400 for more information.
For more information can go to the Massachusetts Court System’s page Massachusetts Law about Repossession.