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What happens when your car loan is charged off?
I had been struggling to make the remaining two payments left on my loan, and fortunately, the lender said they wouldn’t repossess my car. I was dealing with some family matters and a few months later, I received a letter from the lender saying the debt had been charged off. What happens when your car loan is charged off?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
When a
car loan
is charged off, the lender believes the remaining debt is uncollectible. That said, the debt isn’t forgiven—you will still need to make payments.The lender likely offloaded the debt to a collection agency, so you will have to settle the debt with them directly. If the collection agency hasn’t reached out yet, ask your lender for their contact information.
Keep in mind: A charge off negatively affects your credit score and will appear as a judgment on your credit history, so it is crucial to pay it off as soon as possible.
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- Gregory R.
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