What Happens if You Miss a Car Payment?

Missing a car payment can feel stressful, especially if it’s never happened before and you don’t know what happens next. The good news is that one missed payment doesn’t mean you’ll automatically lose your car. But it can trigger a chain reaction that affects your finances, credit, and relationship with the lender. 

Discover what happens if you miss a car payment, including the repercussions on your credit score and what the lender will do with your vehicle. Unfortunately, a missed car payment will damage your credit, and if you don’t catch up, it could cost you your transportation. 

What happens when you miss a car payment?

If you’ve missed a car payment, the consequences occur in stages. What happens next depends on how late you are and your lender’s policies. Most lenders offer a grace period of 10-15 calendar days, which means you won’t face late fees or other penalties. Your late payment won’t be reported to the credit bureaus yet, either. 

After the grace period ends, the lender will add a late fee. Your account is considered delinquent, and the lender may contact you via phone, SMS, email, or mail, depending on your communication preferences. 

If your payment becomes over 30 days late, the missed payment will be reported to the credit bureaus. Your score will drop, and you may accrue additional late fees. When a payment is 60-90 days late, you’ll accumulate additional late fees, and the lender may take extra steps to collect. 

Once a vehicle loan is 90+ days late, your car may be repossessed. In most states, the lender can repo your vehicle without going to court. 

How missing a car payment affects your credit score

Your payment history is the most important factor in your credit score. That’s why even one missed payment can drop your score. If you are less than 30 days late and you get caught up, you can probably avoid any damage to your score. However, once a payment is 30+ days late, it is reported and can lower your score. 

Missing multiple payments compounds the damage. If your vehicle is repossessed, it can stay on your credit report for up to seven years. 

What to do if you can’t make your car payment

Now that you know what happens if you miss a car payment, you probably want to know what you can do to avoid putting yourself in this predicament. If you are about to have a missed car payment, you should take several steps. 

Contact your lender before you miss the payment

You may be embarrassed or stressed about missing your vehicle payment. That’s normal, but it’s okay to reach out to your lender. Failing to contact your lender is a huge mistake, as they may be able to work with you to help you get caught up. 

If you’ve never been late before and have a clear timeline for being able to make the payment, your lender may even waive the late fee as a courtesy.

Honesty is essential. If you aren’t sure when you’ll be able to make the payment, let the lender know. Don’t promise something you can’t deliver. 

Ask about a deferral or hardship program

Many lenders offer short-term relief options, especially if your late payment is due to a hardship, such as a serious illness, injury, or job loss. Ask your lender about:

• Payment deferral, which allows you to skip or delay a payment 
• Loan extensions, which add missed payments to the end of the loan
• A temporary payment plan 

Make sure you ask how the program works. For example, deferring a payment sounds like a good quick-fix. However, most lenders simply double up your next payment. If you know you won’t be able to pay double next month, a deferral may not be the right option for you. 

Look into refinancing 

If your current loan is no longer affordable, refinancing might help you lower your monthly payment or extend your loan term. You may also be able to secure a better interest rate if the market has improved. 

However, if you are going to explore refinancing, you’ll need to do it before you start missing payments. Once a missed payment is reported, it can be very difficult to refinance. 

How to catch up after a missed payment

If you’ve already missed a payment on your vehicle loan, you should:

• Pay the past due amount as soon as possible
• Cover any late fees and bring the account current
• Talk to your lender, especially if you’re struggling to catch up
• Reevaluate your budget to avoid missed payments in the future

After you’ve dealt with your late payment problem, shift your attention to rebuilding your credit score. Making consistent on-time payments going forward can help your score recover over time.

Rebuilding your score after a missed payment

If your credit takes a hit due to a missed car payment, adding a consistent positive payment history becomes critical. Kikoff can help with tools like:

• A Kikoff credit account
• Rent reporting
• Secured credit card

Build credit with Kikoff — no hard credit check to sign up.