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What happens if I stop paying the loan on my RAV4?
I have a RAV4 and I've made monthly payments for about three years. I have two years left, but I lost my job. What happens if I stop paying on it?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
When you quit paying for a car loan on your RAV4, you default on the loan. Defaulting on the loan will accrue extra interest and late fees on the loan, and it may lead to repossession of the vehicle after about 60 or 90 days.
The problem with defaulting is that you risk losing the car, and the impact on your credit score is severe. Missing payments or repossession can drop your score by over 100 points and remain on your credit report for the next seven years, which can make borrowing money far more difficult in the future.
Instead of defaulting, try one of these three options:
- Sell the car and pay off the loan
- Talk to your lender to work out a payment plan or loan deferral
These are all way better alternatives that won’t decimate your credit score.
To save extra cash during your loan, consider switching your car insurance. With the
Jerry
app, you can compare quotes so you always get the best rate for your coverage needs.More: Does refinancing a car hurt your credit score?
View full answer
- Gregory R.
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