How Many Car Payments Can You Miss Before Repo? The Ultimate Guide

When you miss a car payment, it’s natural to worry about the possibility of repossession. So, how many car payments can you miss before repo becomes a real threat? Understanding this process and knowing your options can help you navigate these challenging circumstances.

How Auto Loans Work

An auto loan allows you to finance a vehicle and pay it off over time in monthly installments. When you sign the loan agreement, you agree to terms including interest rates, repayment schedules, and consequences for missed payments. If you miss payments, the lender can take back or repossess the vehicle to recoup their losses.

What Is Repossession?

Repossession occurs when a lender takes back property—such as a car—due to missed loan payments. Since auto loans are typically secured loans, the vehicle is collateral. If you fail to make payments as agreed, the lender can reclaim and sell the car to offset the remaining loan balance.

How Many Car Payments Can You Miss Before Repo?

The specific number of car payments you can miss before your car is repossessed varies by lender. Some lenders might allow three or more missed payments, while others may initiate repossession after just one missed payment. It’s important to understand your loan agreement and communicate with your lender if you anticipate trouble making a payment. 

Risk of Repossession After One Missed Payment

In many cases, you could face repossession after missing just one payment. This depends largely on your lender’s policies. Even if your lender is more lenient, missing a payment can have severe consequences, such as damaging your credit score. If you miss a car loan payment, it typically shows up on your credit report and can stay there for up to seven years, impacting your ability to secure future loans.

Impact of Late Payments on Credit Score

Lenders often report late car payments to credit bureaus, which can lower your credit score immediately. A single late payment might not be as damaging as a missed payment, but it can still affect your credit, especially if it’s overdue by 30 days or more. The longer a payment goes unpaid, the greater the negative impact. If you know you’ll be late, it’s crucial to contact your lender and arrange payment as soon as possible.

Does Your Lender Have to Notify You Before Repossession?

Lenders do not have to notify you before repossessing your car unless it is stipulated in your loan agreement. This lack of notice can catch many borrowers off guard, making it essential to stay current on payments and maintain open communication with your lender.

What to Do If You Miss a Car Payment

If you miss a car payment, take immediate action to mitigate the consequences. Here are a few steps you can take:

Contact Your Lender

The first step is to contact your lender. If you have a missed payment but can afford to pay it, request that they reprocess the payment. For those with automatic payments, a technical issue may have caused the missed payment. If you cannot afford to pay, discuss the possibility of extending the due date or waiving late fees. Many lenders are willing to work with borrowers experiencing temporary financial hardships.

Examine Your Options

If you’re unable to make a payment, consider requesting a loan deferment. This allows you to temporarily pause payments, giving you time to gather funds. If your financial issues are ongoing, explore other options, such as loan modification, which can adjust your loan terms, interest rate, or even the loan type.

Adjust Your Budget

Evaluate your financial situation and adjust your budget to prioritize your car payment. Cutting unnecessary expenses can free up funds to ensure you stay current on your loan. If inflation or other financial pressures make this difficult, consider seeking financial counseling for additional strategies.

How to Get a Repossessed Car Back

If your car is repossessed, it’s not necessarily the end. There are ways to get your vehicle back and even improve your credit score in the process.

Reinstate the Loan

You can reinstate your loan by making a lump-sum payment that covers the overdue amount, including any late fees and repossession costs. Negotiating with your lender might allow you to reach a more manageable repayment plan.

Pay Off the Car

Another option to reclaim your vehicle is to pay off the entire loan balance along with any associated fees. While costly, this method ensures you won’t have to make future payments.

Buy the Car at Auction

If the car goes to auction, you have the option to bid on it. The lender will notify you of the auction details, allowing you to potentially buy back your car. This option might leave you with an outstanding loan balance, but it can get the car back in your possession.