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What happens if I don't pay my car loan?
I’m worried that I won’t be able to pay my car loan this month. What will happen if I miss a payment? I’m really scared of repossession!
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Try to stay calm! Your car won’t get repossessed right away, but there are other consequences if you don’t pay your car loan.
Each time you miss a payment, you’ll see a drop in your credit score and the mark will stay on your credit report for seven years. If you’re unable to catch up and resume making full payments on time in the future, your car could be repossessed by your lender.
Try not to panic, though! There are a few things that you can do if you find yourself in this situation.
First, you should try talking to your lender. If you do so while your loan is still in good standing, they will be more likely to help you come up with a reasonable solution. Periods of financial hardship happen to the best of us, but your lender can’t help you if they are unaware of your situation.
You could also look into refinancing your loan. After making several on-time loan payments, you may qualify for a better interest rate, which would end up saving you money in the long run.
Or if you need to pay less on your car each month ASAP, you may be able to refinance into a loan with a longer repayment period. This would spread out your remaining loan balance, thus reducing your monthly bill.
You can also try cutting costs on other expenses to free up funds to put toward your car loan. To save on your car insurance, check out the
Jerry
app. 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.Lastly—it may be tough to hear—but it might be best to sell the vehicle. That way, you can pay off the loan, stop making loan payments altogether, get back on your feet, and buy a different car when you’re in a better financial position.
MORE: Does refinancing a car hurt your credit score?
View full answer
- 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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