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What happens when you don't pay a car loan payment?
What is going to happen if I miss a car loan payment? I should be able to get back on top of my payment schedule next month, but I am going to have to miss a payment this month because of some unexpected expenses.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That sounds really stressful! Try not to worry too much if you’re just going to miss one payment on your car loan.
When you don’t pay a car loan payment, you’ll see a drop in your credit score and the mark will stay on your credit report for seven years. However, your car usually won’t be repossessed unless you miss multiple payments.
Note that there are a few things that you can do before you actually miss a payment that can be of benefit to you (and your credit score):
- Talk to your lender. Some lenders have relief programs for borrowers struggling to make payments. You may even be able to pause payments for a month or two in order to get back on top of your finances. The earlier you reach out, the more able your lender will be to help you.
- Refinanceyour loan. If your loan has a high interest rate that’s making payments difficult, this could be a good option for you. You may be able to refinance into a loan with a longer repayment period to lower your monthly bill. Or if your credit score is good, you can try to find a lower interest rate. Be sure to refinance before you miss a payment, as a credit check will be required.
- Sell your car. If you don’t need your car right now, you could potentially sel it and use the profits to pay off your loan.
- Trade-in your car. Alternatively, you can trade in the car for a less expensive vehicle. If you do this, any equity that you have on your car will be applied to the sale.
You can also try cutting costs on other bills to put more money toward your car payment. 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.
MORE: Does refinancing a car hurt your credit score?
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