How Many Payments Can You Miss Before Car Repo?

When facing financial challenges, car owners often wonder how many missed payments lead to repossession. There is no fixed number; the process is governed by your loan agreement and state laws. Lenders can repossess a vehicle once a loan is in default, which can happen after even one missed payment, though practices vary.

Understanding Loan Default

Repossession results from defaulting on a car loan. A loan defaults when a borrower fails to uphold the terms of their financing agreement. While one missed payment can technically cause default, many lenders wait until payments are 30 to 90 days past due before starting repossession. Loan agreements often include a grace period, typically 10 to 15 days, allowing payment without late fees. However, a payment made during this period is still late, and consistent late payments can negatively affect your credit score if reported after 30 days.

Beyond missed payments, other actions can also constitute default, such as failing to maintain required insurance coverage. Loan contracts may specify default conditions for unauthorized vehicle transfers or other breaches. Lenders may send notices of delinquency or intent to repossess once a loan is past due, though some states do not require advance notice. Reviewing your loan contract is essential to understand all conditions that could lead to default and repossession.

The Repossession Action

Once a loan defaults, the lender or their agent can proceed with vehicle repossession. Repossession agents use tow trucks to retrieve vehicles from various locations, including public spaces or private property. Lenders do not need a court order to repossess a car, but agents are legally restricted from “breaching the peace.” This means they cannot use physical force, threaten the borrower, or break into locked garages or fenced areas to take the vehicle.

If a vehicle is in an open area like a driveway or an unlocked garage, an agent may legally take it. However, if the car is inside a locked garage, the agent cannot break in to seize it, as this breaches the peace. Actions involving intimidation, threats, or property damage during repossession are illegal. The repossession action focuses solely on vehicle retrieval without causing disturbance or unlawful entry.

Post-Repossession Procedures

After repossession, the lender has specific obligations, including notifying the borrower about the repossession and subsequent steps. Lenders must inform the borrower of their intent to sell the vehicle, specifying if it will be a public auction or private sale. This notice usually includes the date, time, and location of a public auction, allowing the borrower to attend or bid. For private sales, the lender must provide notice of the date after which the vehicle will be sold.

Personal belongings left inside the repossessed vehicle cannot be kept or sold by the lender. The lender must inform the borrower about these items and how they can be retrieved. After the sale, proceeds are applied to the outstanding loan balance, repossession costs, storage fees, and other expenses. If sale proceeds do not cover the full amount owed, the borrower may be responsible for a “deficiency balance,” which is the remaining debt.

Your Rights as a Borrower

Borrowers retain certain rights during and after repossession. One right is to “cure” the default, allowing the borrower to pay overdue amounts and repossession expenses to reinstate the loan and regain possession. Another right is to “redeem” the vehicle by paying the full outstanding loan balance, plus all associated fees, before the vehicle is sold. Lenders must provide written notice of these rights, including specific amounts and deadlines.

Borrowers also have the right to receive notice of the vehicle’s sale, allowing them an opportunity to monitor or bid. If a deficiency balance remains after the sale, borrowers can challenge the amount if they believe the sale was not conducted in a “commercially reasonable manner.”