How to Handle a Missed or Struggling Car Payment
What happens when you miss a car payment
When you miss a car payment, your lender typically reports it to the credit bureaus after 30 days. Before that happens, you have a window to catch up. Most lenders will contact you by phone or mail within a few days of a missed payment—this is a collection call, and it is normal. They are trying to get the payment, not threatening you yet.
If you pay within 30 days, the late payment may not show on your credit report at all. If you do not pay by day 30, it becomes a 30-day late payment on your credit history, which lowers your credit score. At 60 days late, it becomes a 60-day late. At 120 days late, your lender can begin repossession proceedings—meaning they can legally take the car back. The exact timeline varies by lender and state, but repossession can happen as early as 120 days of non-payment.
Key Takeaways
- You have roughly 30 days after a missed payment before it damages your credit score, so contact your lender immediately rather than waiting.
- Lenders can repossess your car as early as 120 days past due, but most will work with you on a payment plan or deferment before that point.
- Deferment postpones a payment to the end of your loan; forbearance reduces or pauses payments temporarily but extends your loan term.
- If you cannot catch up, refinancing, selling the car, or returning it voluntarily may cost less than repossession or defaulting.
- Some nonprofits and local agencies offer emergency car payment help, though availability is limited and varies by location.
Contact your lender before you fall further behind
The moment you know you cannot make a payment, call your lender's customer service number—do not wait for them to call you. Explain your situation plainly: job loss, medical emergency, reduced hours, whatever it is. Lenders have options they can offer, but only if you ask before the payment is 30 days late.
Have your loan number and account information ready. Ask specifically about deferment or forbearance. These are not the same thing, and which one is available depends on your lender and loan type.
Deferment postpones one or more payments and adds them to the end of your loan. You do not pay anything this month, but you will owe that payment later. Forbearance reduces or pauses your payment for a set period—usually 3 to 6 months—but extends your loan term and you still owe the full amount. Some lenders offer both; some offer only one.
Get the terms in writing before you agree. Ask how long the arrangement lasts, whether interest still accrues, and what happens if you miss a payment during the deferment or forbearance period.
Refinancing if you have time and credit room
If you are behind but not yet in default, refinancing can lower your monthly payment by extending the loan term or securing a better interest rate. This works only if you have some credit score left and a lender willing to refinance you. Banks and credit unions are more likely to refinance than the original lender.
Refinancing takes 1 to 2 weeks to close, so this is not an emergency fix. But if you know a payment is coming and you cannot make it, refinancing to a lower payment might prevent you from falling behind in the first place. Compare offers from at least three lenders before choosing one.
Selling or returning the car voluntarily
If you are underwater on the loan—meaning you owe more than the car is worth—or if you simply cannot afford the payments, selling the car and using the proceeds to pay down the loan is often cheaper than letting it be repossessed. A repossession stays on your credit report for seven years and costs you the car plus a deficiency judgment (the amount you still owe after the lender sells the repossessed car at auction).
Selling the car yourself, even at a loss, gives you control over the price and lets you pay off the loan directly. You can list it on Craigslist, Facebook Marketplace, Autotrader, or Carvana. Once you sell it, use the money to pay off the loan in full. If you still owe money after the sale, you and the lender can negotiate a payment plan for the remainder.
Voluntary return (also called surrender) is another option: you return the car to the lender, and they sell it. You still owe the deficiency, but you avoid the repossession fee and the damage to your credit from a forced repossession. Surrender is less damaging than repossession but still shows on your credit report.
Emergency car payment programs and nonprofits
Some nonprofits and local agencies offer emergency car payment help, but availability is limited and varies widely by location. Catholic Charities, Salvation Army, and local community action agencies sometimes have emergency transportation funds. Call 211 (dial 2-1-1 from any phone) and tell them you need help with a car payment; they will refer you to programs in your area if any exist.
Some employers offer emergency assistance programs through their employee assistance plan (EAP). If you have an EAP, call the number on your benefits card or employee handbook and ask whether emergency car payment help is covered. A few credit unions also offer emergency loans to members in hardship.
These programs are not may provide to exist in your area, and many have limited funds. But they are worth checking before you default. Start with 211 and your employer's HR department.
What to do if repossession is imminent
If your lender has told you repossession is coming or you are more than 120 days late, you have a few remaining options. Some states have redemption laws that let you stop a repossession by paying the full amount owed plus the lender's repossession costs, even after the car has been taken. The window for redemption is usually 10 days after repossession, but it varies by state.
Contact your state's attorney general's office or a legal aid organization to learn your state's redemption rules. If redemption is possible and you can raise the money, it is often cheaper than letting the car be sold at auction and owing a large deficiency.
If you cannot stop the repossession, ask your lender in writing whether they will accept a voluntary surrender instead. Voluntary surrender avoids the repossession fee (usually $300 to $500) and may be viewed slightly less harshly by future lenders, though both show on your credit report.
How late payments affect your credit and future borrowing
A 30-day late payment lowers your credit score by 100 to 150 points, depending on your starting score. A 60-day late drops it further. A repossession or default can drop it 130 to 200 points and stays on your report for seven years. This affects not just car loans but also credit cards, mortgages, and even rental applications.
The damage is worst in the first two years after the late payment or repossession. After three years, the impact begins to fade, especially if you make all payments on time in the meantime. After seven years, the late payment or repossession falls off your credit report entirely.
If you do fall behind, catching up as quickly as possible limits the damage. A 30-day late that you cure is far less damaging than a 120-day late or a repossession.
Frequently Asked Questions
Can a lender repossess my car without warning?
Yes. Most states do not require lenders to give you notice before repossession, though many do as a courtesy. Your loan contract spells out the lender's rights. Once you are in default (usually 120 days late), repossession can happen without a court order. The lender does not need your permission or a judge's approval.
What is the difference between a deficiency and a repossession fee?
A repossession fee is what the lender charges to have the car towed and stored, usually $300 to $500. A deficiency is the amount you still owe on the loan after the lender sells the repossessed car at auction. If you owe $15,000 and the car sells for $10,000, the deficiency is $5,000 plus the repossession fee. You are legally responsible for paying this.
Will paying off a late payment remove it from my credit report?
No. Paying a late payment stops it from getting worse, but the late payment itself stays on your credit report for seven years from the date it was first reported. However, the impact on your credit score fades over time, especially if you make all future payments on time.
Can I get a car loan after a repossession?
Yes, but it will be expensive. Lenders view repossession as a serious risk factor. You may need to wait 12 to 24 months after the repossession before a lender will approve you, and the interest rate will be much higher than it would have been before. A co-signer or a larger down payment can help.
What should I say when the lender calls about a missed payment?
Be honest and direct. Explain what happened (job loss, illness, unexpected expense) and what you plan to do (catch up next week, ask for deferment, refinance). Lenders are more willing to work with you if you communicate early and show you have a plan. Avoid making promises you cannot keep.