What happens if I miss a payment on my auto loan?

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Updated:12/08/2024

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1 Answers

ThunderKnight

Updated:10/05/2024

If you miss a payment on your auto loan, it can have several consequences affecting your credit, finances, and even your vehicle ownership.

Late Fees: Many lenders impose a late fee after a missed payment, which can increase the overall loan balance.
Interest Accrual: Interest continues to accrue on the remaining balance, increasing the total cost of the loan.
Grace Period: Some loans have a grace period (usually 10-15 days) where a late fee is not charged.

Credit Score Impact: Missing a payment can lower your credit score, especially if it’s reported after 30 days.
Lender Communication: You may receive calls or notices from your lender regarding the missed payment.
Difficulty Securing Future Loans: A missed payment can affect your ability to get additional credit or loans.

Repossessions: Continuous missed payments can lead to the repossession of the vehicle.
Long-Term Debt Issues: Missing multiple payments can spiral you into deeper financial trouble.

Action	Impact on Credit
Missed Payment (0-29 days)	No reported impact
Missed Payment (30-59 days)	Reported as 30-days late
Missed Payment (60+ days)	Further damage; potential for collections

Contact Your Lender: Explain your situation and see if there’s a way to mitigate the default.
Make the Payment ASAP: If possible, pay the missed installment to limit late fees.
Review Your Budget: Analyze your financial situation to prevent future missed payments.

Refinancing is possible, but your options may be limited, and you might face higher interest rates.

Insurance companies may check your credit when determining rates, which can be negatively impacted by missed payments.

A missed payment can affect your credit score for up to seven years, depending on your credit habits afterwards.

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