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What happens when you stop paying a car loan?
What would happen if I stopped paying my car loan bills? I’m having money problems right now and I’ve been trying to cut costs. My car loan takes a huge bite out of my monthly budget, so it would make a big impact to skip it.
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you stop paying your car loan, you will default on the loan. You will likely experience a drop in your credit score, and the missed payment will appear on your credit report for seven years.
Your score will drop more with each missed payment. If you continue to fail to pay, your lender will eventually repossess your car, which is an even bigger credit score ding. And any remaining debt can be sent to collections, which could land you in court.
Try not to let these potential consequences scare you, though. You have several options before you actually miss a payment:
- You can try talking 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.
- You can look intorefinancingyour loan. Refinancing is a great way to lower your car payments.Jerrymakes it simple—just download the app to compare top lenders.
- You can try selling your car. If you don’t need your car, you could sell it and use the profits to pay off your loan.
- You can considertrading in your carfor a less expensive vehicle. This should lower your monthly loan bill—and likely your car insurance premium, as well.
To save even more money on car expenses, shop for more affordable car insurance with
Jerry
. Jerry will gather competitive quotes from over 50 top insurance providers and deliver the best deals straight to your phone for free. The average Jerry user saves $109 a month by refinancing and $897 a year on car insurance.
MORE: Does refinancing a car hurt your credit score?
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
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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