Missed Car Payments and Repossession: What You Need to Know
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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.
That’s why the car insurance broker and comparison shopping app Jerry has compiled everything you need to know about missing car payments and repossession.
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.
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.
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–perhaps trading your car in for something more affordable or refinancing it to lower the monthly payments.
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.
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 repossessed?
If your lender moves to repossess your car, they must provide you with certain notices, starting with a notice of intent to sell property.
You’ll have a chance to make the required payment(s) and get your 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.
Key Takeaway 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.
How Jerry can help
If your car-related expenses are too high, you may want to take another look at your insurance. Is it affordable?
Car insurance comparison and broker app Jerry can help you compare quotes from multiple providers to make sure that you’re getting the best rates.
Jerry does all the hard work for you, from finding the cheapest quotes from the top name-brand insurance companies to purchasing your new policy. Jerry will even cancel your old policy for you!
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal–so you’re always getting the coverage you want at the best price.
Car loan comparison tool
You deserve a loan package that works for your budget and the confidence that you’re getting the best deal on your auto loan refinance.
There’s just one way to get both: Jerry. This intelligent, AI-based app is the fastest, most accurate way to comparison shop for loan options–and you won’t have to spend loads of time making calls. (And comparison shopping is free!)
Not sure if your current auto loan is the best option for you? Learn about refinancing your auto loan with Jerry and save money on car payments. Compare multiple lenders on the Jerry app to find the best rate for you.
“Took no longer than 15 minutes and I got a great rate with full coverage. I felt so lost trying to find car insurance before this app, and it’s so easy to use!” - Satisfied Jerry Customer
How many car payments can you miss before repo?
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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