Behind on Car Payments? 3 Steps to Prevent Vehicle Repossession
Missed a car payment? Act quickly to avoid repossession and credit score damage. Some lenders can disable vehicles after just one missed payment, but you have several options to resolve the situation.
Know Your Financial Situation
- Check your loan balance, interest rate, and term length
- Review any late payment fees
- Evaluate your budget to find extra money
- Determine if this is a one-time issue or ongoing problem
Understand Available Solutions
For One-Time Missed Payments:
- Make the payment immediately if funds are available
- Request a loan deferment (payment moves to end of loan term)
- Ask about waiving late fees
- Consider setting up automatic payments
For Ongoing Payment Issues:
- Seek immediate deferment to prevent credit damage
- Consider refinancing for better terms
- Look into trading for a more affordable vehicle
- Keep car expenses under 20% of take-home pay
Contact Your Lender
Tips for Successful Communication:
- Call as soon as possible
- Explain your situation clearly and honestly
- Be courteous and professional
- Provide proof of ability to pay (new job offer, etc.)
- Get any agreement terms in writing
Remember: Lenders prefer working with borrowers over repossessing vehicles. Address the situation promptly to protect your credit score and keep your car. Review your budget carefully to prevent future missed payments and maintain your loan in good standing.
If car expenses consistently exceed 20% of your income, consider long-term solutions like refinancing or switching to a more affordable vehicle. Being proactive and communicating with your lender increases your chances of finding a workable solution.