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Late car payments can lead to serious consequences, including credit harm and repossession. With 2.93% of auto loans and leases now over 30 days past due, according to Experian data from the second quarter of 2024, you're not alone if you're grappling with the potential impact of missed payments. Learn how late you can be on a car payment, the potential effects and the steps you can take to protect your vehicle.
What Happens if You Miss a Car Payment?
Missing a car payment can trigger a series of potential consequences:
- Grace period begins: Most auto loans include a 10- to 15-day grace period, during which you can make a missed payment without incurring late fees or other consequences. The grace period varies by lender and state, so check your loan agreement for details.
- Late fee charged: You'll typically be charged a late fee if you haven't caught up on payments by the time the grace period ends.
- Negative credit reporting: If your payment is more than 30 days late, the lender may report it to the credit bureaus. A late payment on your credit report will likely have a significant negative affect on your credit score.
- Limited payment options: Some lenders restrict your ability to schedule future payments or make online payments once you're past due.
- Repossession risk: Since your auto loan is secured by your vehicle, the lender may be able to repossess it if you miss a payment. Most lenders won't repossess until you've missed multiple payments, however.
- Lender notice: You may receive a letter notifying you that you're in default on your car loan and outlining actions to bring your loan current.
- Vehicle disabling: Some lenders use remote disabling technology to prevent your car from starting until your loan payments are brought current.
- Loan acceleration: If your vehicle is repossessed, the lender may require you to pay the entire loan balance, rather than simply making up your missed payment.
- Collections on the remaining balance: After repossession, the lender may auction your vehicle and use the proceeds to pay your loan. Your vehicle may not bring in enough at auction to pay your full balance, however, and you could be sent to collections if you're unable to repay any remaining balance.
Learn more >> How Bad Is It to Default on a Car Loan?
How Many Auto Loans and Leases Are Past Due?
The chart below shows a steady increase in the percentage of auto loans and leases that are 30 or more days past due. This upward trend means more borrowers have fallen behind on their car payments, potentially putting them at risk of vehicle possession. This could be the result of increased financial pressure, potentially due to factors like higher interest rates and inflation.
Percentage of Auto Loans and Leases 30+ Days Past Due
How Many Car Payments Can You Miss Before Your Car Is Repossessed?
In many states, your vehicle can be repossessed without any advance notice from the lender. While repossession can occur after a single missed payment, most lenders wait until you're 30 to 90 days behind on payments. That means you can face repossession after you've missed one, two or three payments.
Repossession timing isn't universal or guaranteed, so it's important to act quickly to avoid losing your vehicle.
Learn more >> What to Do if You Can't Afford Your Car Payment
What to Do if You Miss a Car Payment
If you miss a car payment, taking immediate action can help you avoid serious consequences. Here's what you should do if you miss a car payment.
- Check your loan agreement. Confirm the grace period, late fee policy and repossession terms. This information may also appear on your billing statement or online account and can help you plan out your next moves.
- Contact your lender. Reach out to your lender proactively to discuss your options for avoiding repossession. Lenders are often more willing to work with you if you demonstrate good faith.
- Make the missed payment. If you can afford to do so, pay the missed payment to avoid additional penalties and prevent further delinquency. Consider dipping into your savings, reducing expenses or making side income to catch up on payments.
- Request a payment arrangement or deferment. If you can no longer afford payments, you can ask your lender to break up your past due amount over multiple payments or push out your due date.
- File a credit insurance claim. If you purchased credit insurance with your loan, check whether you're eligible for coverage. Credit insurance may cover your payments after you've lost your job or become disabled.
- Consider refinancing your loan. If your credit is in good standing, refinancing your loan may lower your monthly payments. You'll have to act quickly as refinancing options are limited once you're over 30 days past due.
- Sell your vehicle. Using the money to pay off the loan can prevent repossession. If you're upside down on the loan—you owe more than the vehicle is worth—you'll need to cover the difference.
- Voluntarily surrender the vehicle. You can volunteer to give the car back to the lender. While it avoids the potential hassle and embarrassment of repossession, the credit consequences are similar. You also may still owe a deficiency balance, which is the difference between the loan balance and the amount the lender sells the vehicle for.
The Bottom Line
Missing a car payment can quickly escalate to severe consequences, including damage to your credit score and vehicle repossession. Act quickly if you miss a payment or are unable to make your payment. By contacting your lender early, you can minimize the damages.
If you're considering an auto loan refinance, check your FICO® Score☉ for free before shopping around. You can gauge whether you're likely to qualify and determine whether to consider other options.