What if I can’t make my car payment?

If you’re falling behind on your bills, you’re not alone. According to the Federal Reserve, around 1 in 4 adults has at least one bill they’re unable to pay in full. Unfortunately, if your auto loan is one of those bills, you run the risk of losing your vehicle. 

But that doesn’t mean you’re out of options. Here’s what to do if you find yourself asking, “What if I can’t make my car payment?”

How long can you go without making a car payment?

If you’ve missed a car payment this month, don’t panic yet. Most loans come with a grace period, typically 10-15 days, where you can make your payment without paying a fee. But after the grace period expires, you risk taking a hit to your credit score. 

The exact length of time you can go without making a car payment varies between lenders. Generally, lenders don’t attempt repossession until you’re 60 to 90 days, or 2 to 3 payments, behind schedule. 

Can I postpone a car payment?

Some lenders let you defer, or postpone, your car payment for a certain period of time. They may build the deferment option into your loan and send a “Skip a Payment” option in the mail or on their website. Others require you to send a hardship letter explaining why you need the deferment and for how long. 

Does voluntary surrender hurt your credit?

If you can’t afford your car payment, you may opt for a voluntary surrender instead. This process involves handing your vehicle to the lender and walking away. However, don’t make this decision lightly. Because a voluntary surrender admits you didn’t fulfill your original loan agreement, it can negatively impact your credit score for up to seven years.  

9 things to do if you can’t make your car payment

If you’ve missed a car payment – or you’re about to – consider these nine options.  

Talk to your lender

First, you should call your lender and explain you’re falling behind and need help with your car payment. Many lenders will work with you to get your payments under control and avoid the repossession process. Remember: the sooner you reach out, the more options you may have. 

Some potential courses of action include:

• Changing your due date

• Extending your loan term

• Paying off missed payments over time

• Entering forbearance, which temporarily pauses your payments

That said, some options may charge additional fees or interest, so explore each carefully.   

Request a deferral

If changing your due date isn’t enough, you can also ask about deferring your payment for a month or two. But not every lender offers deferments, and some won’t work with you if you’ve already fallen behind.  

Refinance your car

If you frequently find yourself saying, “My car payment is too high,” then maybe it’s time to lower your payment. With a good credit score, you can replace your current loan with a new one, potentially on a longer term or lower interest rate.  

Sell or trade-in your car

If you consistently can’t make your car payments, it could be time to let go of your car. Depending on your needs, you may trade in your vehicle for a cheaper alternative or sell it outright. 

That said, if you owe more on the car than it’s worth, you may not make enough money to pay off your loan entirely. If that’s the case, you might have to work out a deal with the lender or take out a small personal loan to cover the difference.  

Get a side hustle

If you can’t afford to lose your car, you can get a side hustle to boost your income. Some potential ways to make money include:

• Driving for Uber or Lyft

• Signing up with a delivery service in your town 

• Freelancing online

• Buying items at thrift stores and flipping them online 

Cut out unnecessary expenses

You can also “boost” your income by spending less each month. Examine your budget and determine if you need all those streaming subscriptions or morning coffees. If the answer is no, you can free up some of your income.  

Turn in the keys

If you’re already facing repossession, you can voluntarily surrender your keys to the lender. While this move can seriously drop your credit score, it’s less embarrassing and expensive than an involuntary repossession of your car. But keep in mind that your credit report will reflect the surrender for up to seven years. Plus, if the lender can’t sell the car for the loan value, you’ll have to pay the leftover balance.  

File for bankruptcy 

If you’re in a big enough hole, then not making your car payment is just one symptom of your situation. If that’s the case, it may be time to file for bankruptcy. But don’t make this decision lightly, as bankruptcy is complex and can impact your credit for a decade.  

Let your car be repossessed 

If you just can’t afford a car right now, you can let the lender repossess your vehicle. While the process comes with a massive strike on your credit report and some potential emotional turmoil, you won’t be held liable for the remaining balance on the vehicle.  

So, what if I can’t make my car payment?

Act now, not later! Each potential strategy above suits a different situation. But no matter which you take, it’s crucial to keep your lender in the loop. At the end of the day, working with your lender – even if you lose the car – looks better than ignoring the problem until it’s too late.

FAQ

What do I do if I can’t make my car payments?

If you need help with your car payment, the first step is to contact your lender and talk through your options. Then, you can work out a solution that suits your situation.

How many payments before car is repossessed?

Typically, lenders wait until you’re at least 2-3 consecutive payments behind to repossess your vehicle.

Can your car be repossessed if you make a partial payment?

From the lender’s standpoint, making a partial payment still counts as you defaulting on your loan. However, lenders may handle partial payments differently, so contact yours directly if you can’t make your full payment.