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Can they garnish wages for a car loan?
I’ve missed two consecutive months of car payments, and I haven’t heard from my lender yet. I’m nervous, but I just can’t afford to pay right now. Will they start garnishing my wages if I don’t pay my car loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Making consistent
car loan payments
can undoubtedly be challenging. But if you’re going to miss a payment, you should contact the lender immediately to avoid repossession.If legal in your state, lenders can garnish wages for a car loan—but only if the vehicle has been repossessed and sold for less than you owe. Wage garnishment is used to cover the deficiency between the vehicle’s selling price and your outstanding loan balance. It is not used to cover monthly payments.
However, wage garnishment is typically a last resort because it requires the lender to sue and obtain a judgment against you. Alternatively, most lenders prefer that you:
- Pay the deficiency
- Create a payment plan
- Negotiate a settlement
After contacting the lender and finding a solution that works for both parties, you can make repayment a bit more manageable by saving on other expenses like your
car insurance
. The Jerry
app can help.A licensed broker, Jerry does all the hard work of finding cheap quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even help you cancel your old policy. The average Jerry user saves $879 a year on car insurance!
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- Gregory R.
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