In most cases, lenders won’t repossess your car until no payments have been made for 60–90 days.
Even if you don’t face repossession, missing car loan
payments can have a serious financial impact. Missed car payments will negatively affect your credit score and, if you’re not able to get the situation under control, they can result in your financing company repossessing your vehicle.
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What to do if you miss a car payment
If you do miss a car payment, it’s important to take action immediately. You’ll need to get everything in order and communicate with your lender to avoid repercussions.
1. Figure out how much you owe (and whether you can pay it)
Maybe you accidentally overlooked the payment, or perhaps you’re having trouble getting the funds to cover it.
Either way, you’ll want to immediately check your loan balance, any applicable interest, and whether you owe a late or missed payment fee. Sometimes an NSF fee can also apply if you’re on automatic withdrawals and the payment bounced.
Look at your budget to see if there are areas you can cut back in so that you can put more money towards your car payments. Generally speaking, you should try to keep car-related expenses to no more than 20% of your after-tax income.
2. Determine your options
If you can afford to make the payment, call your lender and have them re-process the payment as soon as possible.
Setting up automatic payments can help reduce the chances of missing one in the future.
If you can’t afford the payment, you’ll need to think about whether this is a one-time issue or an ongoing problem.
If it’s just a one-time issue, you might be able to defer the payment. This pushes it to the end of the loan term, and you’ll typically only be required to pay the interest for that month instead of the entire loan payment.
If the missed payment is an ongoing issue, it’s likely a sign that your car loan is unaffordable for you. You’ll want to defer the missed payment and then look at your options–trading a car with a loan
is possible, or maybe refinancing your car to lower the monthly payments will work well for you. 3. Call your lender
Then it’s time to explain the situation to your lender.
Call to let them know what happened and ask about potential solutions. Remember to be polite–after all, you’re asking for their help!
Lenders may be more willing to help you if you show that you’re committed to doing something about the situation. If you appear to be in a downward spiral, you may actually raise their concern.
If there’s a specific reason that you missed the payment, like losing your job, they may ask for proof. Be prepared to provide something to back up what you’re saying.
If you’re going to sign anything, such as a loan deferment, take your time to read everything and consider the terms. You want to understand what you’re signing and get it all in writing.
Missing a car payment requires quick action. Figure out how much you owe and whether you can pay it, speak to your lender, and come up with a plan that can help you avoid missed payments in the future.
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How many car payments can you miss before repossession?
Lenders usually won’t repossess your car until no payments have been made for 60–90 days.
Legally speaking, though, most states allow them to begin the repossession process as soon as the car is in default–meaning, as soon as you’ve missed one payment.
If the loan is in default, the lender can repossess your car at any time, without notice, and can come onto your property to do so.
Even if your car isn’t repossessed, missed payments are costly and usually stay on your credit record for about seven years, so it’s always best to avoid them whenever possible.
What happens if your car is repo?
If your lender moves to repossess your car, they must provide you with certain notices, starting with a notice of intent to sell the property.
You’ll have a chance to make the required payment(s) and get your repossessed car back before it’s auctioned off or privately sold.
If your car is sold, you’ll receive notice of the amount it sold for and whether you still owe a remaining balance (called the deficiency).
If you’re unable to pay this remaining balance, lenders may send it to a collections agency.
Ignoring this issue won’t make it go away. You may receive a summons to appear in court, and failing to appear can result in a judgment being entered against you.
In the worst case, they can freeze your assets and seize your personal property in an attempt to recoup their losses.
If your car is repossessed, you could still owe your lender a remaining balance. If you’re unable to pay it, you could end up in court.
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If your car-related expenses are too high, you may want to take another look at your insurance. Is it affordable?
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FAQs
How many car payments can you miss before repossession?
Legally speaking, your lender can begin repossession as soon as the loan is in default–meaning once you’ve missed just one payment.
Practically speaking, though, most lenders won’t repossess a vehicle right away if you’re open, honest, and it’s clear that you’re trying to figure out how to make up the missed payment.
How long after the missed payment can repossession begin?
Repossession can begin anytime after the loan is in default. Most lenders won’t start repossession unless no payments have been made for 60–90 days.
At that point, they can take the car at any time, without notice, and can come onto your property to do so.
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