It is generally difficult to give a specific number of car payments that can be missed before repossession because it can vary depending on the terms of your loan agreement and the laws of your state. In most cases, a lender will send a notice to the borrower after they have missed one or two payments, informing them that they are in default on their loan and providing them with an opportunity to catch up on the missed payments. If the borrower is unable to catch up on the missed payments, the lender may begin the process of repossessing the vehicle.
It is important to note that it is generally in the borrower’s best interest to try to avoid missing car payments and to communicate with their lender if they are having difficulty making their payments. If the borrower is able to work out a payment plan or arrangement with the lender, they may be able to avoid repossession. It is also a good idea for the borrower to try to sell the vehicle on their own if they are unable to make the payments, as this may be a more favorable option than having the vehicle repossessed.
Who is the owner of the car?
When you take out a loan to buy a car, you may think that you are borrowing money for “your” car. Actually, you have borrowed a car. It’s not yours until you pay for it in full. Thinking of it this way, it becomes clear that even though you may have a vehicle, you do not own it. Lender does.
How does repositioning work?
Although the details of repossession can vary depending on the lender, the process looks like this in most cases
- The borrower defaults on payment.
- The lender will issue a repossession notice.
- If no payment is made after a predetermined amount of time, the loan is labeled “in default.”
- The lender takes possession of the vehicle.
The amount of time it takes for this to happen varies, but if you don’t pay, it will happen. The old days of dodging the repo man are long gone. GPS location and remote starter make hitch repositioning quick and effortless.
How many car payments can you miss before possession?
The maximum number of payments made before repossession depends on your lender’s policies, but in most scenarios, two or three missed car loan payments in a row will lead to repossession.
👉 Tip: Lenders have the right to take the car back immediately after your first defaulted payment, although many allow a grace period of 60 to 90 days.
If you act quickly, you may be able to prevent recapture. If you have missed a payment or know you will miss a payment, don’t wait. Take the initiative and try to resolve the situation.
Call your lender and ask for payment deferment
This allows you to skip a month and defer the missed payment till the end of the loan tenure. Not only will this give you some flexibility, but it will also allow you to stay in good standing with your lender and protect your credit score from damage.
make additional arrangements
If you can’t get a payment deferment, ask what steps you can take to get your loan back in good standing. Don’t try to hide or avoid the lender. Indicate a willingness to make a catch-up payment on your next payday, ask for 60 days to make a payment rather than deal with the amount at the end of your loan, or explain a special circumstance, such as a medical emergency.
👉 Tip: It is not in the best interest of the lender to take the car. They make more money from the interest on the loan than they make from selling the car. Your efforts to arrange payment may work in your favor.
refinance your car loan
If you can’t afford your payments, refinancing your car loan can help you lower your interest and monthly payments. Refinancing with a longer loan term will lower your monthly payments, but it will increase your interest expense in the long run.
If you are planning to refinance, try to do it before you miss the payment. Once you’ve missed a payment, it will be very difficult to obtain a refinance loan at a competitive rate. You might not get even one.
if you really can’t pay
If you don’t have a way to pay off your car loan, don’t just wait for it to come back. Assess your situation and take action.
Are you underwater on your loan?
If you owe more on your loan than the value of your car, you are underwater or upside down on your loan. The technical term for this is “negative equity”.
Check the balance on your loan, and check Kelley Blue Book for an estimate of the value of your car.
If you’re above water on your loan, your best bet will probably be to sell the car, pay off the loan, and shop for a more affordable vehicle.
If you’re deep in debt, you have few options. One is to voluntarily surrender the vehicle. It will hurt your credit, but it’s less stressful than repossession, and you’re less likely to lose personal effects in the vehicle.
What can I do after repossession?
If none of these strategies work and your lender takes possession of your vehicle, there are some best practices to make a bad situation worse.
If you don’t have the opportunity to do so, ask where your vehicle is to retrieve your personal belongings.
The seizure indicates that you may not be in the best financial position for an immediate recovery. Get back on track by budgeting and determining your financial situation.
What are my rights and responsibilities regarding possession?
It is important to recognize that you still have rights during possession.
You can retrieve your personal belongings from the car. If the repossessor takes your motor vehicle, you have the right to recover all of your personal belongings inside it.
The lender cannot use threats or physical force. If your lender violates the law, it can be penalized. They may be required to compensate you if damage is done to you or your property.