Repossession Laws in New York

If you don’t repay your auto loan, the lender (also known as the creditor) can repossess your car to recoup the money. That’s because car loans are secured loans, and your car is the collateral backing up the loan. The thought of losing your car suddenly can be terrifying, but you can take steps to stop the repossession. And there are rules in place to protect you during the repo process if it happens. 

Car repossession laws are different in each state. This article covers how vehicle repossession works in New York state and what your rights are as a New Yorker. 

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

Your lender can repossess your vehicle when your loan is in default. This is determined by the terms of your auto loan in New York. Your loan contract spells out the terms of your loan, including what happens with past-due or missed payments and whether there’s a grace period. A grace period grants you extra time beyond the due date to make a payment without the lender considering the loan to be in default. 

Under the New York Motor Vehicle Retail Leasing Act, if you lease a car, the lessor (the person who leased the car to you) must give you notice of how much you need to pay to reinstate your lease and 25 days to pay it before they can repossess your car.

Will I Be Notified Before the Repossession? How?

New York repossession agencies aren’t required to give you notice before repossessing your motor vehicle. They can take your car at any time once you are in default.

How Can I Prevent a Repossession?

Because auto loans are secured loans, your creditor has the right to take your car if you’re in default, but you have rights, too. If you know you’re going to have a late or missed payment, you should try reaching out to your lender. Repossession costs your lender money, so take heart that it’s also in the lender’s interest to avoid repossessing your car. Hopefully, you can work out an alternate payment plan or a forbearance agreement. 

In some states, borrowers are allowed to cure their default within a specified time frame. Curing the default means catching up on payments, and it’s a way to avoid auto repossession. But in New York, your car is up for repossession as soon as you’re in default. Check your loan agreement to see if your lender includes options to cure your default. Refinancing the loan, asking for a hardship deferment, filing for bankruptcy, or doing a voluntary repossession are additional strategies you can explore.

What Can Repo Companies in New York Do? 

Under the Uniform Commercial Code, repossession companies can repossess your car or render it unusable as long by disabling it as they don’t breach the peace. A breach of the peace includes:

• Using force, threats, or tricks

• Damaging property

• Entering your home without consent. 

Your home includes your garage or any property behind a locked gate. This means your car can’t be removed from those areas without your consent. Otherwise, repo agencies can take your car from the driveway, private lots away from your home, or any public space.

You can verbally object to the repossession by saying something as simple as “I object.” The repossession agent can’t proceed once you do so. If they do, they will have breached the peace, and you should call the police. The repo agency then needs to get court approval to complete the repossession. 

Keep in mind: you can’t breach the peace, either. That includes trying to physically stop the repo company from taking your car. Also, if you attempt to prevent the repo company from doing its job, there may be other negative consequences. Doing this puts you at risk of being injured, being arrested, or incurring additional charges from the repo company. For example, you might be tempted to hide your car in your garage, but that could cause the repo company to make multiple attempts to take your car. Each attempt costs money and your lender will pass those costs on to you.

There are no licensing requirements in New York for repo companies. This means New York repossession agents have less oversight and regulation than repo agents in other states. If your car is repossessed in New York, you can document the incident to protect yourself in case the repo agency mishandles the repossession. This includes noting the date, time, repo company, and agent information. You can also take photos, ask witnesses for statements, and even call the police if you feel comfortable doing so. 

This evidence will be valuable if you need to make a complaint about the repo agency. You may even be able to use it as a legal defense to get your car back before it’s sold.

What About the Personal Property in My Car? 

If you know you may be at risk of a repo, you should remove all of your personal property from the car so you don't have to deal with the hassle of getting it back. If the repo company takes the car before you’ve removed your property they should tell you how to retrieve your belongings and provide an appointment for you to do so. If your car is taken with your belongings inside and you don’t receive the proper information from the repo company, contact your lender and let them know what items have been taken.

What Happens After a Repossession in New York? 

In most cases, the creditor will sell your car at auction for the highest price possible. If you have paid more than 60% of the loan balance, the repo is considered a strict foreclosure, and the lender has to sell your car within 90 days. The lender is required to make commercially reasonable efforts to try to sell your car. This includes advertising the sale and trying to sell the car for market value. The lender must also give you reasonable advance notice of the auction date so you can attend and bid if you wish.

Do I Still Owe After a Repossession in New York? 

You may think that having your car repossessed makes things even between you and your lender. Unfortunately, this isn’t the case. Your lender will apply the auction proceeds in the following order: 

1. Repossession expenses

2. Sale expenses

3. The balance due on your loan 

The lender is required to itemize the costs of the repossession in a specific way. These costs should be detailed in an explanation letter. If your repossessed vehicle was sold and you didn’t receive a letter explaining the costs, ask for it. 

If the auction proceeds aren’t enough to cover the balance due on the loan, you’ll be left with a deficiency balance. Borrowers who are upside-down on their car loans are more likely to be left with a deficiency balance. The lender has the right to sue you for this amount. You can try to negotiate a settlement to pay the balance and avoid a judgment.

If the lender gets a court judgment for the balance, they may be able to garnish your wages. One way to proactively reduce your deficiency balance is by doing a voluntary repossession or voluntary surrender. This way, you’ll avoid having to pay repo fees.

Repossession can make you feel powerless but you can act as your own private consumer rights detective. The notices borrowers are owed and the lender’s commercially reasonable efforts as part of this process are extremely important. Review these and the explanation letter carefully as lenders can and do make mistakes. Ask for receipts. If the lender messes these up, you can raise this as a defense in court. The lender could lose its right to the deficiency or even be made to pay you the deficiency balance plus 10% of the loan principal.

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

Once your car has been repossessed, you should receive a Notice of Intention letter within 72 hours that explains how you can try to get your car back before it’s sold. New York gives you the right to redeem or get back your repossessed vehicle by reinstating the contract. You reinstate your contract by paying any late/missing payments plus repo expenses such as towing, storage, and legal fees. But you must act quickly to do this. If this option isn’t stated in your letter, call your lender. If there is an acceleration clause in your loan agreements, the lender may demand the entire remaining balance on the car. 

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

• Motor Vehicle Repossessions Advice from National Consumer Law Center

• New York Repossession Law information

• Information on Automobile Repossessions from the Legal Aid Society of Northeastern New York

• Information on Repossession Laws from the New York City Bar

• Information on additional rights you may have under a car lease from the New York City Bar