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What happens when you don't pay your car loan?
What is going to happen if I don’t pay my car loan this month? I had some medical bills that I wasn’t expecting and I’m way over my monthly budget. What should I do?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I’m sorry to hear that! There are a few things that will happen 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 continue to miss payments and you’re unable to catch up, your car could be repossessed by your lender. However, you’ll have two to three months to catch up before this happens.
Before you miss a payment, consider these alternatives:
- Talk to your lender. Some lenders will work with borrowers who are experiencing financial hardship. Ask about your options. The sooner you contact them, the better your chances will be of coming to some sort of an agreement.
- Sell your car. If you don’t need your car, you can try to sell your car and use the profits to pay off your loan.
- Trade in your carfor a less expensive vehicle. This will reduce your monthly loan bill and likely your car insurance premium, as well.
MORE: Does refinancing a car hurt your credit score?
View full answer
- Gregory R.
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