How Long Can You Miss a Car Payment?

Missing a car payment can lead to financial consequences beyond late fees. Understanding these outcomes is important for maintaining vehicle ownership and financial well-being. Timely car loan payments are fundamental to responsible financial management, impacting creditworthiness and access to future credit.

Initial Consequences of a Missed Payment

Missing a car payment typically triggers immediate actions from the lender and can result in various charges. Most auto loans include a grace period, often ranging from 7 to 15 days, during which a payment can be made without incurring late fees. Once this grace period expires, lenders commonly assess late fees, which might be a flat rate, such as $25 to $50, or a percentage of the overdue amount.

As soon as a payment is missed, even before the grace period ends, the loan account is considered delinquent. Lenders will typically begin contact attempts through phone calls or letters to remind the borrower of the overdue payment and accumulating fees. These initial steps are designed to prompt payment before more severe repercussions, such as credit reporting or repossession. While a grace period prevents late fees, the account is still technically past due from the original due date.

Credit Reporting and Impact

A missed car payment can significantly damage a borrower’s credit history and score. Lenders generally report missed payments to the three major credit bureaus once they are 30 days or more past due. Payments only a few days late, or within the grace period, are typically not reported. This 30-day mark is a key threshold, as a reported late payment can cause a substantial drop in a credit score.

The impact on a credit score can be significant, with a single 30-day late payment potentially causing a drop of 50 to 150 points or more, especially for individuals with previously excellent credit. Payment history is a primary factor in credit scoring models. Negative marks from missed payments can remain on a credit report for up to seven years from the date of the original delinquency. Even if the account is brought current, the late payment record persists, affecting future credit applications for loans, mortgages, or credit cards.

Repossession Timelines and Process

Prolonged missed payments can lead to vehicle repossession, where the lender takes back the car due to loan default. While a lender technically has the right to repossess a vehicle after just one missed payment, most typically wait until payments are at least 60 to 90 days past due. The exact timeline for repossession varies based on state laws and the specific terms outlined in the loan agreement. Some states may require lenders to provide a “right to cure” notice, giving the borrower a specific period, often 20 days, to bring the account current before repossession proceeds. However, in many states, lenders are not required to give advance notice before repossessing the vehicle.

After repossession, the lender typically sells the vehicle, often at a public auction or private sale, to recover the outstanding loan balance. If the sale proceeds do not cover the full amount owed on the loan, including repossession and sale costs, the borrower may be liable for the remaining amount, known as a “deficiency balance.” This deficiency balance can be substantial, and the lender may pursue its collection through demand for payment, collection agencies, or even legal action. A repossession, whether voluntary or involuntary, will also appear on a credit report for seven years, impacting creditworthiness.

Actions to Take When Facing Payment Difficulty

If you anticipate or are experiencing difficulty making car payments, communicate immediately with your lender. Lenders often prefer to work with borrowers to avoid the costly and time-consuming process of repossession. Proactive engagement can open up several options that may provide temporary relief.

One common option is payment deferral, where the lender allows one or more payments to be moved to the end of the loan term. While this offers immediate relief from a monthly payment, interest may continue to accrue during the deferral period, potentially increasing the total cost of the loan. Another possibility is a loan modification, which involves changing the original terms of the loan, such as lowering the interest rate or extending the loan term to reduce monthly payments. Lenders may consider such modifications, especially if the borrower can demonstrate a financial hardship.

If other options are exhausted, voluntary surrender of the vehicle is an option. This involves the borrower proactively returning the car to the lender. While a voluntary surrender still negatively impacts a credit report, similar to an involuntary repossession, it may help avoid additional repossession fees and demonstrate cooperation with the lender. However, the borrower remains responsible for any deficiency balance after the vehicle is sold.