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What happens when my car loan is charged off?
What does it mean if my car loan is charged off? My lender says they have charged off my car loan, but I don’t know what that means. Is the debt erased or do I still need to pay it off?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Hearing that your
car loan
has been charged off may sound like the debt has been forgiven, but you are still responsible for repaying the debt unless you file for bankruptcy
and it is discharged. When a loan is charged off:
- You’ve likely been delinquent for 120 days or more.
- The lender believes the debt cannot be collected and stops trying.
- Your account with the lender is closed. The remaining debt is offloaded to a collection agency.
- Your credit report will have a judgment added. Your credit score will be negatively affected.
At this point, to settle the debt, you should contact the collection agency directly to talk about repayment and find a plan that works for both parties involved. If you aren’t sure how to reach the collection agency, your lender likely has the information.
If you’re looking for ways to help ensure you can repay the debt quickly, use
Jerry
, an insurance comparison app that can save you hundreds of dollars each year on your car insurance
. After providing you with a comprehensive cross-analysis of the best policies across over 50 providers, Jerry will handle the phone calls, paperwork, and renewals for your top pick so that you don’t have to. They even help cancel your old policy! So why do all that extra work when Jerry can do it better?
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- Gregory R.
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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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