car payments

Car Payments and Repossession: What You Must Know Before Taking That Auto Loan

Car repossession is a haunting reality that plagues many Americans every year who, for whatever reason, fall behind on their car payments. If you are distressed about one day finding your parking spot empty, then you will greatly benefit from understanding the process of car repossession and how to avoid it.

How Many Car Payments Can You Miss Before A Car Repo?

According to The Federal Trade Commission, generally, you can expect car repossession to occur if you miss three or more payments in a row on your car loan. The creditor can do this by coming onto your private property, at any time, without notice.

A payment that is more than 30 days late is considered a missed payment. However, each state has its own repossession laws, which determines how many payments you can miss before car repo takes place. Missing one payment may result in repossession, but it not common.

How About Missing One Payment

So you have missed just one payment on your auto loan. It is not the time to panic; it is however time to act fast!

Missing just one payment on your auto loan can have a substantial impact on your credit score. If you’ve missed your car payments because of an oversight, either your card didn’t go throughor you simply forgot to pay, you will need to get in touch with your lender right away. Then send a check, or log onto your online account immediately to make the delinquent (late) payment, as well as your upcoming payment. To avoid such incidences in future you can enroll in autopay.

What if I Can’t Make My Car Payments

Since in most cases you have about three months before you default on your loan, this buys you time come up with a strategy to get back on track with your payments. Most lenders would rather work with you to avoid a default situation, rather than go through a repossession process. Here’s what to do if you’re struggling to make car payments:

Create a Budget

After determining what you are looking at in terms of making up the balance on your loan, come up with a detailed budget of your expenses. See where you can cut any unnecessary expenses to provide for more allowance towards your auto payments.

Loan Deferment

For a one-time missed payment, you can result to loan deferment.This allows you to move your missed payment to the end of the loan term. Some lenders may even waive missed payment fees or late fees if you defer.

However, if you’re unable to pay what you owe, and know that this is going to be a continued problem, you have the following choices:


This entails trading your current loan for a different loan with new terms, either with your current lender or with a different lender, so thatyour loan term can be extended, allowing you to pay less each month.

Trade In Your Car

This involves trading in your car for a more affordable car so you can meet your loan obligations.