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Car prices are on the rise. According to Kelly Bluebook, the average new automobile costs $46,526, just a few hundred dollars below the record high of $47,000 seen in January 2022. Making matters worse, interest rates for auto loans have increased significantly since the Federal Reserve imposed the highest rate hike in 28 years. All of this amounts to the average car loan costing the borrower $698 per month.

Unsurprisingly, the auto loan industry has seen default numbers quickly escalating. According to NBC News,

Generation Z and millennials today have auto loan delinquency rates that are significantly higher than their pre-pandemic levels, according to new data from the credit reporting agency TransUnion. Gen Z, which includes those born in 1995 and after, has a past-due rate of 2.21 percent, compared with 1.75 percent before the pandemic. Millennials, those born between 1980 and 1994, have fallen behind on car loans at a rate of 2.14 percent, compared with 1.66 percent before the pandemic.

If you’re a Massachusetts borrower who has defaulted on his car loan, or if you’re receiving threating letters from your lender, here’s what you need to know.

Your lender must follow the state’s law when taking back a car or truck for nonpayment.

The law is  found in M.G.L. c. 255, section 13J.

It states that:

  1. the lender must wait at least 10 days after nonpayment before sending notice of the potential repossession;
  2. a written notice entitled “Rights of Defaulting Buyer under the Massachusetts Motor Vehicle Installment Sales Act” must be sent to the debtor;
  3. the notice must give the debtor 21 days from when it was sent to catch up on payments to avoid repossession. (This is called the “default cure” period.)
  4. The notice must tell you the exact amount owed and when its due.

(Note that if you got notice of default, or nonpayment, three or more times, the lender doesn’t need to provide any more notices before repossessing your vehicle.)

The law also limits how and where the repossession can occur, stating that the vehicle can be seized

only if possession can be obtained without use of force, without a breach of peace and, unless the debtor consents to an entry, at the time of such entry, without entry upon property owned by, or rented to the debtor.

If you have any questions regarding Massachusetts’ consumer protection laws, please contact me at