What Happens If You Don’t Pay Your Car Payment?
Let’s face it. Anyone who’s seen Operation Repo knows ultimately what happens if you don’t pay your car payment, but of course your car doesn’t get repossessed immediately. So what happens in between your first missed payment and the time they send someone out to get your car?
That’s what we’ll explain below.
But first, if you’re looking here are the steps you should take before you miss a payment…
Believe it or not, the best thing to do first (if you believe you’ll be able to keep making payments in the future) is see if you can find a better loan (here are ReadyForZero’s recommended auto loans) or contact your lender and ask if you can modify your repayment plan. When you get them on the phone you can tell them the following:
1. You won’t be able to make a payment this month. (If you’ve never been late before, be sure to tell them that)
2. You will be able to make a payment soon, but need a modified repayment plan.
3. Ask if they can let you go one month without a payment or possibly reduce the payment amount for a few months.
4. Ask if they can waive your late fee.
Some lenders may be willing to let you pay less for a few months or even skip a payment (known as deferment) – but the amount you defer will be added onto your loan balance, meaning you’ll pay more interest in the long run. That’s certainly better than losing your car entirely and damaging your credit score (which is what happens when a car is repossessed).
Another option might be to refinance your loan. Refinancing can help to lower the monthly payment you’re expected to make. However, you’ll probably need a relatively good credit score to make that happen.
But what if you can’t pay the payments anymore – not now and not in the future? This is a common situation when people lose their jobs or have their income reduced. In that case, your best choice may be to sell your car entirely. And if you have an alternate means of transportation, selling the car should ease your stress and give you a way out of a difficult financial situation.
A final option, which may be quite unpleasant, is to “turn your keys in” – which means giving the car back to the dealer voluntarily. Keep in mind, even if you do this, you will still owe the difference between what the car is worth and what you still owe on the car loan.
2 Responses to “What Happens If You Don’t Pay Your Car Payment?”
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I have an 84 year old friend. He has a 3 yer old car with a 6 year loan. He lost his job injuries and cannot return to work anymore. There is no way he can make any more payments now or ever. He gets social security and can barely pay his food and rent bills. He has about a thousand in savings. When they repo his car can the bank take his savings? What should he do.
Hi Lewis, fortunately, I don’t think the lender would be able to take his savings. They can repossess the car and if they wanted to sue him for debt owed they could do that, but the likelihood of that is not particularly high.