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What happens if your car loan is charged off?

I’ve missed multiple car loan payments. The lender said the loan might be charged off soon, but what happens if your car loan is charged off? Is the debt just forgiven?

Jack Walsh · Updated on Dec 8, 2021

Reviewed by Shannon Martin, Licensed Insurance Agent.

I’m sorry to hear you’re having trouble with your car loan. If your

is charged off, you still need to pay the debt, but it is likely being held by a collection agency, not the original lender.

Lenders typically charge off a loan after 120 days of delinquent payment. When they charge off the loan, lenders offload the debt to a collection agency rather than collect payment themselves.

When the loan is charged off, your credit score will be negatively affected, so if possible, you should contact the lender or

before this happens to find a more manageable repayment plan. If it has already been charged off, you should repay the debt as soon as possible.

If you’re looking to refinance your vehicle, Jerry can help. Jerry compares offers from multiple lenders to make sure you never overpay for your loan. On average, car owners pay $85 less every month by refinancing their auto loans.

MORE:

How to get out of an upside-down car loan

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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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