What is an arrears balance on a car loan?

I was late on a car payment. Now I look at my statement and it says I have an arrears balance of $401. What does this mean?

Answer
An arrears balance may sound confusing, but it’s actually quite simple.
This term refers to any amount of money that’s due on a car loan after the payment due date. Because you were late on your car loan payment, the amount you owe is simply listed as an arrears balance.
Once you square up with the bank on this payment, you should see the arrears balance disappear because you no longer owe any extra money on your loan.
Don’t stress too much though. Although you may owe a bit extra in interest or late fees, lenders won’t report a lack of payment to the credit bureaus unless you’re more than 30 days late on your payment.
If you’re having trouble paying your car note on time, search for savings in other places. A good place to start is your car insurance. Rates can fluctuate over time, so when your policy comes up for renewal, shop for other rates with the Jerry app. Download the app, sign up in minutes, choose your policy, and Jerry takes care of the rest!
Eric Schad
Answered on Oct 21, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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