How Many Car Payments Can You Miss Before Repo?

Austin KilhamUpdated December 13, 2022

Share this article:

Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

In many states, you’re theoretically in danger of losing your vehicle after just one missed payment. But in reality, repossession usually takes longer, with the exact process depending on your lender and your state’s repossession laws.Your lender has the right to repossess your car as a way to recoup some of their losses should you fail to pay back your loan. When you take out a car loan, you make a promise that you’ll repay the loan in regular installments with interest. Because your lender is taking a risk by extending credit to you, they use your car as collateral.Here’s a look at how the repossession process works, how long before a car is repossessed, and whether you can head it off by making your missed payments.

What Is Repossession?

A repossession is the seizure of property that is used as collateral for a debt, usually due to nonpayment. The lender can seize anything of value used to secure a debt. Your car is one such item that a lender can take to pay down a delinquent auto loan. Another example is a house going into foreclosure if an individual fails to pay their mortgage.

How Does Car Repossession Work?

In an ideal world, you would make your auto loan payments on time and in full every month. This not only helps you avoid car repossession, but it helps your credit score, which can make securing future credit easier and cheaper.However, if you do miss a payment, you first may owe late fees, and your missed payment may get reported to the credit reporting bureaus. This can have a negative impact on your credit score.It’s cheaper and easier for lenders if you continue making auto payments yourself, so they’ll likely try everything they can to get you to pay. They may give you up to three months to put your finances in order and make up missed payments, though the length of this period will vary by lender.Once you’ve missed a certain number of payments, your lender will declare that you’ve defaulted on the car loan. They may use a third-party company, known as an auto recovery service, to help them track down the vehicle. When the company finds your car, they’ll send a repossession agent, who will tow the car away when it’s unattended. The lender can take the car at any time and without notice once it is in default. They can even go on to private property to take it.At this point, your lender will likely decide to sell the vehicle, usually at public auction. If they do, they have to let you know when that will happen, so that you can attend the sale and bid on the car if you’d like.You may have the option to reinstate the loan after repossession. You also may be entitled to buy back the vehicle, either by purchasing it at the repossession sale or by paying off the entire amount you owe, including back payments and costs related to the repossession of the car, like towing and storing the vehicle.Once your lender sells the car, you may not be off the hook just yet. Often lenders are unable to sell the vehicle for enough money to pay off the loan. Say you owed $12,000 on your vehicle, and your lender was only able to sell it for $8,000. The difference between these amounts — $4,000 — is known as the deficiency. You may have to pay that amount before you can close the book on the repossession, regardless of whether it’s an involuntary or voluntary repossession.

Are Missed Car Payments the Only Reason for Repossessions?

Missed auto loan payments aren’t the only reason your car may get repossessed. Missed car insurance payments, for example, may be another reason. Pay careful attention to your loan contract to ensure you know what steps will trigger a repossession.

How Long Before Your Car Gets Repossessed?

As mentioned, the amount of time you have before the repossession process starts is completely up to the lender. The best place to find how long before a car is repossessed is in your loan documents. In these documents, you’ll find the length of your grace period, which is the amount of time you have to make a loan payment without triggering late fees or going into default. Laws on when you’ve entered default vary from state to state. But in many states, the law allows repossession proceedings to start just one day after you miss a payment. However, most lenders will give you 90 days before they start repossession.

Does Your Car Get Repossessed After Making the Missed Payments?

Lenders typically don’t have to warn you that they’re going to repossess your car. You may not know it’s coming, and as a result, you may not have time to plan for it.Your best bet if you want to avoid repossession is to make your missed payments as quickly as possible. If you know you’re going to have trouble making your payments, contact your lender as soon as you can to explain your situation. As we’ve mentioned, they likely see repossession as a last resort on their part, so they may do what they can to help you pay off your loan. Go into the conversation knowing how much you can afford to pay and when you’re likely able to pay it. Your lender may work with you to offer solutions, such as loan deferment, which allows you to put off payment until you’re financially stable again.You also may talk to your lender about refinancing your loan to make it more manageable. When you refinance, you take out a new loan to pay off your old one. The new loan will hopefully have a lower interest rate, or a longer term that should help lower your monthly payments. Just keep in mind that while a lower monthly payment may be easier to budget for and make on time, a longer term means you’ll end up making interest payments for longer. This can ultimately increase the cost of your loan in the long run.

The Takeaway

Repossession can leave you with a black mark on your credit score and worse, it can leave you without vital transportation. Avoid it by always making payments on time. And if you find yourself up a creek financially and unable to pay, work with your lender to see how they can help. It’s better to be proactive than to sit around worrying about how many car payments you can miss before repo.If you’re interested in the option of refinancing a car loan to help make auto loan payments more manageable, make sure to shop around. Lantern’s refinancing tools can help you compare top lenders and apply for loans in one place. Comparing different lenders to see what terms and interest rates they offer can help you secure the most competitive offer.

Frequently Asked Questions

How many car payments can you miss before your car is repossessed?

If you repay missed payments, will your car be repossessed?

How long does it take a repossession to be processed?

iStock/ThamKC

LCAU1122004

About the Author

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.

Share this article: