What To Do if You Can’t Make Your Car Payment

If you can't make your car payment, call your lender right away — ideally before the due date — and ask about a due-date change, a payment plan, a deferral or forbearance. Acting early gives you the most options and the best chance to protect your credit and keep your car.

The one thing not to do is ignore it: On a secured loan like an auto loan, missed payments can lead to default and, in many states, repossession without a court order or warning.

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If you’re in the unfortunate predicament of asking yourself, “What if I can’t make my car payment?” the best bet is to respond to your lender immediately and hash it out with them. They may be able to offer short- and long-term debt relief options (think forbearance and deferral). Here’s what you need to know.

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Key Takeaways

• Don't ignore it — call your lender first: The worst move is doing nothing, so reach out before the due date, explain whether your hardship is temporary or longer-term, and ask what relief they can offer.

• Ask about short-term relief: Many lenders may move your due date, split a payment, set up a catch-up plan, or offer deferral or forbearance — but interest usually keeps accruing, fees may apply, and some options are reported to the credit bureaus.

• Know what missing a payment sets off: A missed payment can bring a late fee, then credit-score damage, then default, collections and eventually repossession if it goes unresolved.

• Repossession can come fast: In many states, a lender can repossess after a single missed payment without a court order or advance warning, though rules vary by contract and state.

• Refinancing can lower your monthly payment: Extending your term can ease the monthly cost — for example, roughly $350 down to under $200 on a $10,000 balance — but you'll likely pay more total interest, and approval depends on your credit and income.

• Selling, trading down or surrendering may be the responsible move: If the car is truly unaffordable, these can beat waiting for repossession — just know you may owe a deficiency balance if the sale doesn't cover the loan.

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What Should I Do if I Can’t Make My Car Payment?

If you can’t make your car payment, the absolute worst thing you can do is nothing at all. Instead of putting the issue on the back burner, do the following:

1. Call your lender, ideally before the due date.

2. Discuss your hardship. Is it temporary, or do you expect it to last a while?

3. Inquire about a new due date, a payment plan or any deferment/forbearance options.

4. Make sure you understand the fees and interest of any new plan you accept.

The sooner you reach out, the more tolerant your lender will likely be — instead of contacting them when you’re already delinquent. Still, there’s no promise that they’ll work with you. But if they do, you’ll want to get an alternate agreement in writing. And be sure to save records.

What Happens if You Miss a Car Payment?

Missing your car payment isn’t the end of the world, but it can be the first domino in a series of consequential events.

First, your lender may charge a late fee if you don't pay before the grace period expires. If you’re still unable to pay, the missed installments will eventually show up on your credit report — which can wreck your credit score. If you keep missing payments, you risk defaulting on the loan, which can lead to collection calls and even repossession.

Lenders typically end repossessions by selling the vehicle to satisfy what you owe. If they can’t recoup all the money, you may still owe the difference. Grace periods, notice requirements and repossession rules vary by contract and state. So do some research to understand your unique situation.

Ask Your Lender About Short-Term Payment Relief

We all hit rough patches. If you’re going through a (presumably temporary) slow period, your lender may offer short-term relief options.

It may help to rearrange your due date to better match your payday. Some lenders will even allow you to split a payment or set up a repayment plan to gradually catch up. You may possibly be able to defer a payment to a later date. Again, this isn’t a long-term solution, but it can give you some breathing room in the moment.

In more dire situations, forbearance or other hardship options can temporarily pause your payments. These are generally added to the end of the loan and continue to accrue interest — and may even come with fees. In some cases, they’re reported to credit bureaus and can affect your credit score. Make sure you know what you’re getting into before accepting help like this. And obtain written confirmation of the details.

Consider Refinancing Your Auto Loan 

By refinancing your car loan, you may be able to lower your monthly payments and even get a lower annual percentage rate (APR), depending on the interest rate you were assigned upon account opening.

Say you owe $10,000 on a car with $350 monthly payments. Stretching the loan over a longer term could drop your payment below $200 a month, depending on your rate and term — though you'd likely pay more in total interest over the life of the loan. Your approval and APR depend on your credit score, income and how much you owe.

Remember, there’s more to focus on than the monthly payment. Before you refinance, it’s wise to shop around and compare APR, fees and prepayment penalties across three or more lenders.

Sell or Trade in the Vehicle 

If you see no way that you’ll be able to afford your car’s payment for the foreseeable future — or if you’ve decided that it’s best to simply jettison a monthly car payment altogether — selling or trading in your vehicle for something else can make total sense.

Start by checking your car’s market value and comparing it to your outstanding loan balance. If you don’t think you can pay off your loan by selling, you’ll need to pony up the remainder of the money when you sell. You can’t transfer the title until you repay the loan.

What if You’re Already Facing Repossession? 

If repossession is right around the corner, contact your lender immediately to see if there’s anything within your means that you can do to prevent it. Carefully read any notices and check your state’s repo rules.

According to the Consumer Financial Protection Bureau, lenders in many states can repossess a vehicle without a court order or advance warning once you've missed a payment, though some states require notice and a chance to catch up first. If your car is repossessed and sold, you may owe the difference between your loan balance (plus repossession fees) and the sale price — a "deficiency balance." For example, if you owe $10,000 and the car sells for $7,500, you could still owe $2,500 plus fees. Grace periods, notice requirements and repossession rules vary by contract and state, so check your loan agreement and your state's rules.

Is Voluntary Surrender Better Than Repossession?

“Voluntary surrender” simply means that you’ve returned the vehicle to your lender instead of requiring them to repossess it. This is the cooperative option, but it still hurts your credit (though perhaps not as badly). You may also still owe money on the difference between your auto loan debt and whatever the lender can get from selling the car.

This may save you from a repossession fee, but it otherwise has a similar impact to repossession.

How To Decide Which Option Fits Your Situation

The best option depends on the severity and length of the financial strain. Here’s a simple guide to help you narrow down your options.

Remember to be honest with yourself and with your lender about your budget and the timeline of your hardship. A short-term fix won’t help if you’ve deemed your vehicle permanently unaffordable.

Because repossession, deficiency and bankruptcy rules vary widely by state, consider free guidance from the CFPB or a nonprofit credit counselor before you decide — and talk to a local legal aid office or consumer-law attorney if you've already received a repossession or court notice.

Bottom Line

Never ignore an unaffordable car payment. Act as soon as you suspect you won’t be able to make that payment, as you’ll have more options at your disposal. Contact your lender early and be honest about struggling with payments; they may offer help that can protect your credit and help you keep your car. Just remember to get all agreements in writing.

Look at your options based not just on the relief you’ll get now, but the ultimate cost over time. If a payment is truly beyond your means, selling or trading may be the most responsible option instead of waiting for repossession.

FAQs About Missing a Car Payment

What if I can’t make my car payment this month?

If you can’t make your car payment this month, reach out to your lender and tell them. They may offer hardship programs for the financial difficulty you’re going through. They may also be willing to move your due date or put you on a payment plan.

How many car payments can you miss before repossession?

There’s no lender-wide number of missed car payments before repossession. Laws vary by state, and practices vary by lender. That said, it’s possible that repossession may occur after just a single missed payment.

Can I defer a car payment?

You may be able to defer a car payment if your lender allows it. Deferred payments typically continue to accrue interest and can be reported to credit bureaus.

Does voluntary repossession hurt your credit?

Yes, voluntary repossession will hurt your credit, though potentially not as bad as if the lender came to your house and repossessed the vehicle against your will.

Key Terms

• Auto loan (secured loan): A loan backed by your vehicle as collateral, which is why the lender can repossess the car if you fall behind.

• Grace period: A short window after the due date during which a payment can be made without a late fee — its length depends on your contract and state.

• Deferment: Pushing one or more payments to a later date, usually the end of the loan; interest typically keeps accruing.

• Forbearance: A temporary pause or reduction in payments during hardship; missed amounts are generally added to the loan, still accrue interest and may be reported to credit bureaus.

• Refinancing: Replacing your current auto loan with a new one, often to lower the monthly payment or APR — though a longer term can raise total interest.

• Repossession: When a lender takes back the vehicle after default; in many states this can happen without a court order or warning.

• Voluntary surrender: Returning the vehicle to the lender yourself instead of waiting for repossession; it still affects your credit and can leave a deficiency balance.

• Deficiency balance: What you still owe if the lender sells the repossessed car for less than your loan balance, plus repossession and sale fees.

Sources

• CFPB: What should I do if I can't make my car payments?

• CFPB: What happens if my car is repossessed?

• FTC: Vehicle Repossession

Summary generated by AI, verified by MoneyLion editors

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