How Many Payments Can You Miss Before the Car Is Repossessed?

Everything seems more expensive these days, and it's harder for many people to stay on top of bills. If you fall behind on your car payments, lenders in most states can repossess your car after one missed payment.

Vehicle repossession climbed to an estimated 1.73 million in 2024, according to Cox Automotives, with the default rate reaching 3.13% — the highest since 2011.

Losing a vehicle can disrupt how you get to work, school, and doctor appointments, among other inconveniences. If you're at risk of falling behind on your payments, taking action is essential to protecting your finances and keeping your car.

How many car payments can you miss before repossession?

Lenders can repossess a vehicle after just one missed payment, according to the Consumer Financial Protection Bureau. Missing your payment due date puts your loan into default, and most state laws allow lenders to begin repossession immediately, often without notice or a court order.

However, many lenders have their own repossession terms. Lenders want to recoup the money owed, and their best chance to get the full amount is to work with borrowers.

Your contract typically defines when you’re in default. Review your loan agreement carefully to learn how much time you have before the lender starts the process.

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How does the repossession process work?

If you fall behind on your payments, the repossession process begins.

1. The lender begins the repossession process.

Depending on your state, the repossession process can begin within days, and the lender may not be required to give you a warning. In general, the lender reports the defaulted loans to the major credit bureaus and sends a repossession agent to your home or workplace to collect the vehicle.

2. The lender repossesses your car.

The agent can legally remove your vehicle from any public street, parking lot, or even your driveway. Repossession agents aren’t allowed to breach the peace, meaning they can't enter a closed or locked garage, or use threats or physical force.

In some states, lenders can install electronic disabling devices, sometimes called starter interrupt systems. If you miss a payment, the lender can activate the device to prevent the vehicle from starting, effectively disabling it until you make a payment.

3. The lender sells the vehicle.

The lender either sells the car at a public auction or through a private sale. If the vehicle sells for less than the current loan balance, you're still responsible for the difference — the deficiency balance — plus any added fees.

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What to do if you can't afford your payments

Whether you've already missed a payment or think you won't be able to afford an upcoming payment, consider these three key options.

1. Contact your lender. Lenders may be willing to work with you if you proactively reach out about financial hardships making it difficult to repay on time. Contact your lender at the first sign of trouble to discuss your options, such as deferring a payment, changing the payment due dates, or restructuring the loan.
2. Refinance your loan. If you have good credit (or a creditworthy co-signer), you may be able to refinance the vehicle and replace your existing loan with a new loan. Through refinancing, you could qualify for lower interest rates or a longer repayment term to lower your monthly payments.
3. Voluntarily surrender the car. If the payments on the auto loan are beyond what you can afford due to a change in income or a job loss, you can opt to voluntarily surrender the car. While you'll still have to repay the remaining loan balance after the car is sold and the proceeds applied to the balance, a voluntary repossession is usually a lower-cost option with fewer fees.

Consider talking with a nonprofit credit counselor or licensed attorney for personalized guidance. The National Foundation for Credit Counseling (NFCC) can connect you with free or low-cost counseling at 800-388-2227.

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How does a vehicle repossession affect your credit?

Vehicle repossession can significantly affect your credit, and it can linger on your credit report for up to seven years.

After a vehicle repossession, your credit score is likely to go down, making it difficult to qualify for the best rates and terms on future loans. And since many car insurance companies use credit-based insurance scores in their underwriting processes, a lower credit score can cause you to pay more for car insurance.

But a repossession’s impact fades over time, so focus on a path forward: paying on time, paying down debt, and limiting new credit applications.

Every on-time payment you make adds something positive to your credit history. Kikoff's Credit Account reports your on-time payments to all three credit bureaus. And there’s no hard credit check to open one.