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What happens when a car loan is charged off?

I stopped making car loan payments a while ago. A collection agency contacted me saying I still owe money and that the loan has been charged off. What happens when a car loan is charged off?

avatar
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Having a collection agency contact you for money is never a good feeling. Since you stopped making car payments a while ago, the lender has also stopped trying to collect payment. When a
car loan
is charged off, your original account is closed out and the remaining debt passed to a collection agency.
It’s important to understand that you still have to pay the remaining debt It may be tempting not to, but the charge off negatively affects your credit score. The sooner you’re able to pay it off, the better off you’ll be.
If you’re trying to cut costs on your monthly bills, or want to make repayment a bit more manageable, download
Jerry
, a
car insurance
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MORE: How to refinance a car
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