Missing and Late Payments

Missing and Late Auto Loan Payments

Job loss, medical emergencies, family deaths—life happens, and sometimes events lead to missing or making late payments on your auto loan. So what can you do if you're unable to make a car loan payment?

Contact Your Auto Loan Lender

When facing a missed or late car payment, your first step should be to contact your car loan lender. Typically, lenders want to keep their customers, and they'll explore ways to help you make your monthly payment again.

Generally, your lender will consider your:

  • Reason(s) for the missed payments. Be prepared to be honest. Did you lose your job? Was there a medical emergency? Your lender knows you're human and wants to work with you as such.
  • Payment history. Do you normally make your monthly payments on time, or do you have a history of late payments? Obviously, a history of missed payments won't work too well in your favor, but it's still important to have open communication with your lender—no matter how uncomfortable.
  • Credit score. Do you have a poor, average, or high credit score? How has your credit score changed, if at all, during the course of the loan so far? Just as credit scores are important for determining auto loans, they're important for determining how to move forward with missed payments on existing car loans.

Your lender's solution will depend on factors such as these, as well as the lender's specific policies.

After considering your situation, your lender might offer to:

  • Defer your payments.
    • Generally, this means the missed payment gets tacked onto the end of the loan.
  • Change the monthly payment date.
    • This can help you in terms of making sure you have the money when it comes time to make your payment.
  • Modify the terms of the car loan.
    • This move depends on the current terms of your loan, but generally modifying the terms of your loan means adjusting terms to give you the flexibility and ability to make your payments on time.
  • Waive late fees.
    • Naturally, this is on a lender-by-lender, case-by-case basis, but if your lender waives your late fees, it could help you find the money to make the base monthly payment.
  • Refinance your auto loan.

NOTE: Again, no matter how uncomfortable it is, it's crucial to contact and stay in contact with your lender; otherwise, you could face vehicle repossession, which is the worst-case scenario. See Repossession & Your Credit Score below for details.

Refinancing Your Car Loan

Your current auto loan lender might suggest refinancing the loan to get a lower monthly payment as a solution to missed or late payments, and depending on factors like your current credit score, you even could get better interest rates than your current loan.

Also note that you don't have to refinance your auto loan with your current lender; you can shop around for other lenders to see if you can find even better interest rates.

Learn more about refinancing car loans in our section on Auto Loan Refinancing.

Consider Selling Your Vehicle

You might consider selling your vehicle if you and your car loan lender can't come up with a reasonable solution, including refinancing.

When you sell your vehicle, you're looking to make enough money to pay off your current car loan; however, given how much you owe on your vehicle versus how much the vehicle is worth (i.e., if you're upside-down on your car loan), you might still incur some out-of-pocket expenses.

Consider this option carefully. Obviously, it will leave you without a vehicle (or, at least, one vehicle short), which is an important factor. Additionally, because you might owe more on the vehicle than it's worth, you may end up with some out-of-pocket expenses. Since you already have missed payments on your record, make sure these potential out-of-pocket expenses are something you can afford.

Consequences of Missing and Late Payments

You risk the following facing the following consequences by being late or completely missing your auto loan monthly payments:

  • Negative items on your credit report.
    • Expect your lender to report your late or missing payments to the 3 credit bureaus.
  • Repossession of your car.
    • Not only will you be left without a car, this will also negatively affect your credit report and score.
    • After repossession, you are likely to still owe the difference between the amount the lender is able to get for the car in auction, and what you originally owed.

Missing and late payments can lead to devastating consequences. Work with your lender as much as possible to avoid these.

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