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How to avoid repossession on a late car loan Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive tools and financial calculators that provide objective and unique content. We also allow you to conduct research and compare information for free - so that you can make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are advertised on this website are provided by companies that pay us. This compensation can affect the way and where products are displayed on the site, such as, for example, the order in which they may be listed within the categories of listing, except where prohibited by law. Our mortgage, home equity, and other products for home loans. But this compensation does have no impact on the content we publish or the reviews you read on this site. We do not cover the entire universe of businesses or financial offers that may be accessible to you.



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Zak Kendal/Getty Images
4 min read published April 22nd, 2022
Authored by Kellye Guinan Written by Personal and business finance contributor

Kellye Guinan is a freelance editor and writer with more than five years of experience in personal finance. She also works full-time as a worker at her local library where she helps people in her community get information on financial literacy, as well as other topics.







Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping their readers feel confident to take control of their finances by providing concise, well-studied data that digests complicated topics into bite-sized pieces.









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Default can happen after just one late payment, but in most cases it's not a problem. Auto loans won't be charged off until you stop making payments for multiple months -- up to 120 days typically. Your lender will likely send you notice of default before repossessing your vehicle. In certain states, you'll be given the opportunity to pay back the amount you owe, but this may not be the case in all states. Between default and repossession There are a number of strategies to stop your car in the event of repossession. Six strategies to prevent repossession If you're currently in default or at risk of it repossession is a possible possibility. To avoid it, you will need to stay in contact with the lender and restructure your finances. 1. Keep in touch to the lender Make sure you keep your lender up to date regarding your financial situation, capacity to make payments , and overall finances. Keep a record of every interaction, including the name and title of each person you speak to, and send any letters through certified mail so that you can provide evidence that you have done your part. They would rather have their customers pay back their auto loans instead of repossessing their cars. Make sure you have evidence of your financial condition. If anything should change you need to let your lender immediately. It pays to be polite but and firm when discussing the possibility of repossession. It is best to avoid repossession at any cost So, keep calling the management line until you get someone to assist you with your loan. 2. Request a loan modification. A repossession is a significant chance for the lender and the lender, too. It will need to take over the loan, hire someone to take possession of the vehicle then store it in a safe place and then sell it at auction. In this case it could be beneficial to ask the lender for a reduced payment. Your lender is likely to be able to to defer a few payments or restructure the terms to allow you to keep up with payments. Make sure to let the lender know the specifics of your circumstance and talk about when and how you will be able to repay. The lender is not under any legal obligation to alter the terms of the terms of your loan however it could help you and your lender avoid a lot of the stress that repossession poses. 3. Make sure you are current on your loan If you can pay your loan in full and fees and ask the lender to get your loan. This will end the default process and is the most efficient method of avoiding default . This is fine that this option isn't accessible to you. For the majority of people who are facing repossession, obtaining a current payment on the loan isn't possible. There are options to access the money -- such as -- but they could create a different kind of stress on your life. 4. Sell the car If your automobile loan is too much every month, you could sell your car privately . Provided you aren't over the limit on your loan which means you are owing more than what it's worth, you may be able to change to a less expensive ride. Be sure to sell your car in a manner that will be sufficient to pay off the total sum of your loan and any charges you have to pay. If you can't then, you should discuss the matter the terms with your lender and see if it might allow you to reduce fees. In the end, selling your car may not provide you with the a down payment to purchase another vehicle. When it's between repossession, surrendering the car or selling the car, you'll be left without transportation no matter what. Selling your car helps keep your credit in good standing, but it may put you in a situation like repossession. 5. Refinance your loan Extending the loan duration or decreasing the rate of interest can make your auto loan cheaper. If you've been late on multiple payments and are currently in default you likely do not have the credit . That isn't a reason to not try. Online lenders and credit unions, in addition to some local banks that are small, offer more flexibility in terms of requirements. Remember that applying for financing can also impact your score on credit, which is why make sure that you apply for several loans at once to prevent multiple attacks. You might not be able lower your interest rate but extending your loan duration is a possibility. This can help make your monthly payments much more affordable. But it does mean you'll be paying more interest overall. It could be worth the cost to avoid repossession however, it should be done only after you've exhausted other alternatives. 6. Surrender your car You have the option of surrendering the car to your lender when you can't pay. You won't have access to it and will need to consider alternate methods of transportation, but it won't count as repossession -- but your credit score may still decrease. When you do the latter, your lender will undergo a similar process as repossession. They will take over and then sell your vehicle at auction. If the purchase price is more than what you owe, you're covered. If not, you will be held responsible for the rest of the loan amount as well as any additional fees you've accumulated. The auto repossession process operates Once you're in default, your lender has every right to take possession of your vehicle. If your state's law states that it is not required, repossessions don't require notification or notice. It's possible to lose your car at any point after having defaulted. If your vehicle is taken, your lender could provide you with information about the auction in which your car will be sold. Otherwise, you may be able of reestablishing your loan by getting caught over the outstanding amount as well as any other fees associated with repossession. Like every aspect of the repossession process, the information the lender must provide you depends on your state. The next step Repossession remains on your credit report for years which makes it harder to get a new auto loan. Be sure to keep up with each step, talking with the lender and doing what you can to avoid repossession. While not all options will be available to you but they're worth a try when you are up against losing your car. Find out more


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Written by a Personal and Business finance contributor

Kellye Guinan is a freelance editor and writer who has more than 5 years experience working in the field of personal financial matters. She also works full-time as a employee at her local library where she helps her community access information about financial literacy, as well as other topics.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping their readers feel confident to control their finances with concise, well-researched and well-informed data that breaks otherwise complex subjects into digestible pieces.






Auto loans editor




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