What to Do When You Can't Make Your Car Payment

When you can't pay, contact your lender before the payment is due

If you know you won't have the money for your car payment when it's due, call your lender's customer service number—the one on your bill or statement—and tell them. Do this before the due date, not after. Lenders have options they can offer you, but they can only do that if you reach out first. Waiting until you're late makes those options harder to access and damages your credit score faster.

Your lender is a bank, credit union, or finance company—not the dealership where you bought the car. They own the loan. The dealership sold the car and passed the loan to the lender on day one. When you call, have your loan number and account number ready. These are on your bill.

Key Takeaways

• Contact your lender before your payment is due, not after, to learn what options exist for your specific loan and situation.
• Deferment, forbearance, and loan modification are real options some lenders offer, but each one changes what you owe and when.
• A single late payment stays on your credit report for seven years and can raise your interest rate on other debts.
• If you fall behind, your lender can repossess the car once you are typically 60 to 90 days past due, though timing varies by state and lender.
• Selling the car yourself or refinancing with a different lender are options if you want to exit the loan without repossession.

What deferment and forbearance actually do

Deferment means your lender lets you skip one or more payments and adds them to the end of your loan. You don't pay this month, but you will pay it later. Your loan gets longer. Some lenders offer deferment once per loan; others don't offer it at all. It depends on the lender and the terms of your specific loan agreement.

Forbearance is similar but usually temporary—often 30, 60, or 90 days. During forbearance, you pause payments. After the forbearance period ends, you resume regular payments, and the skipped amount gets added to your balance or spread across the remaining payments. Like deferment, forbearance is not may provide. Your lender decides whether to offer it based on your history with them and the reason you can't pay.

Neither option erases what you owe. Both increase the total amount you'll pay over time because interest keeps accruing on the deferred or forbearance amount. But both keep you from falling behind and damaging your credit if you're facing a temporary hardship.

Loan modification and what it costs

A loan modification changes the terms of your existing loan—usually by extending the loan term (making it longer) so your monthly payment drops. If you owe $10,000 over 36 months at $300 a month, a modification might stretch it to 48 months at $225 a month. You pay less each month, but you pay for longer and pay more interest overall.

Some lenders offer modification as a hardship option. Others only modify loans that are already behind. Ask your lender whether modification is available before you miss a payment, and ask them to show you the numbers: the new payment amount, the new end date, and the total interest you'll pay. Write it down. Then decide whether the lower payment is worth paying more interest.

How late payments damage your credit and what happens next

Your payment is considered late if it arrives after the due date on your bill. A single late payment stays on your credit report for seven years. It will lower your credit score immediately—sometimes by 100 points or more, depending on your score before the late payment. A lower score means higher interest rates on credit cards, personal loans, and future car loans. It can also affect your ability to rent an apartment or get hired for some jobs.

After you're 30 days late, your lender reports the late payment to the credit bureaus (Equifax, Experian, and TransUnion). After 60 days late, the damage is worse. After 90 days late, your lender can begin the process of repossessing the car. Repossession timing varies by state and lender—some can repossess as soon as you're one payment behind, though most wait until you're 60 to 90 days behind. Once the car is repossessed, you still owe the remaining loan balance, and the repossession itself appears on your credit report for seven years.

Refinancing with a different lender

If your current lender won't work with you, you can try refinancing—taking out a new loan with a different lender to pay off the old loan. The new lender pays your current lender in full, and you now owe the new lender instead. This works if you have a credit score high enough that another lender will approve you, or if you have a co-signer.

Refinancing can lower your payment if the new lender offers a lower interest rate or a longer loan term. It can also raise your payment if your credit score has dropped since you took out the original loan. Before you refinance, ask the new lender for the full cost: the interest rate, the monthly payment, the loan term, and the total amount you'll pay over the life of the loan. Compare it to what you're paying now. Refinancing costs money—there are application fees, appraisal fees, and title transfer fees—so make sure the savings are real.

Selling the car yourself

If you sell the car, you use the sale price to pay off the loan balance. If you owe $8,000 and sell the car for $9,000, you pay the lender $8,000 and keep $1,000. If you owe $8,000 and sell the car for $7,000, you still owe the lender $1,000 out of pocket. This is called being "upside down" on the loan.

To sell the car, contact your lender and ask for a payoff quote—the exact amount needed to close the loan on a specific date. The quote is good for a limited time, usually 10 days. You then list the car for sale, and when you have a buyer, you coordinate with the lender so the sale proceeds go directly to them. The lender releases the title once the loan is paid in full. You don't get the title until the loan is gone, so you can't sell the car without the lender's involvement.

What happens if you ignore the problem

If you don't contact your lender and don't make payments, the late payments accumulate. After 120 days or more of non-payment (timing varies by lender and state), your lender may charge off the loan—meaning they write it off as a loss and stop trying to collect from you directly. But charging off doesn't erase the debt. The lender can still sue you for the remaining balance, and if they win, they can garnish your wages or put a lien on your bank account. A charge-off stays on your credit report for seven years.

Repossession can happen during this time. Once the car is repossessed, it's sold at auction. If the auction price is less than what you owe, you're responsible for the difference—called a deficiency. If you owe $10,000 and the car sells at auction for $6,000, you owe $4,000 plus any fees the lender charged for repossession and sale. The deficiency can be sued for just like the original loan.

Frequently Asked Questions

Can my lender repossess my car if I'm only one payment behind?

It depends on your loan agreement and your state's laws. Some lenders have the legal right to repossess after one missed payment, but most wait until you're 60 to 90 days behind. Check your loan paperwork or call your lender to ask what their policy is. Even if they can repossess immediately, they usually don't—but don't count on that.

If I defer a payment, does it hurt my credit?

Deferment itself doesn't hurt your credit if you arrange it before you miss the payment. Your lender reports it as an agreed-upon arrangement, not a late payment. But if you miss the payment and then ask for deferment after the fact, the late payment has already been reported and will damage your score.

What if I can't afford the car even with a lower payment?

Selling the car or letting it be repossessed are your options, but selling is better for your credit and your finances. With repossession, you still owe the deficiency, and the repossession appears on your credit report. Selling lets you control the outcome and potentially avoid owing money after the sale.

Can I get my car back after it's repossessed?

Yes, but only by paying the full amount you owe plus repossession fees, storage fees, and any other costs the lender charged. This total is usually thousands of dollars. You have a limited time to do this—often 10 days—before the car is sold at auction. After the auction, you can't get the car back, but you still owe any deficiency.

Does calling my lender put me on a payment plan automatically?

No. Calling starts a conversation. Your lender will ask about your situation and tell you what options they can offer. You decide whether to accept deferment, forbearance, modification, or none of them. If you don't like what they offer, you can explore refinancing or selling instead.