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.

Answer
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 into refinancing your loan. Refinancing is a great way to lower your car payments. Jerry makes 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 consider trading in your car for 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.
Liz Jenson
Answered on Dec 03, 2021
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