Once you are 30 to 90 days late on your repayments, your lender will likely say that your loan is in default. Once you're in default, the lender may be able to repossess your car anytime, without notice, and come onto your property to take it.
If you default on your auto loan, your lender will likely repossess the vehicle unless you surrender it voluntarily. A repossession can compound the damage done to your credit by your late payments and make it difficult to get approved for another auto loan for a while—or other types of financing like a home loan.
Ask for a Voluntary Repossession
Voluntary repossession allows you to return a car you financed without being subject to the full repossession process. This could spare you some credit score damage, though a voluntary repo could still be reported to the credit bureaus.
What are the consequences of not making your car payment? If you're anywhere from 30-90 days late, your car could get repossessed.
When your car loan is charged off, that means the lender no longer believes you will repay the loan, and they may sell your account to collection agencies or debt buyers. You still legally have to repay the loan, and it can significantly damage your credit.
When it comes to debt collection calls, it is never clever to ignore them. In fact, it may make things a lot worse for you. The debt collector may file a collections lawsuit in court, which could lead to the garnishing of wages, seizure of personal property, or money taken from your bank accounts.
The statute of limitations on debt in California is four years, as stated in the state's Code of Civil Procedure § 337, with the clock starting to tick as soon as you miss a payment.
Even falling one payment behind is enough for a lender to repossess your car. Usually, a loan is two or three months behind before the lender initiates a repossession. At that point, the lender can seize the vehicle, often without warning, and then sell it to recover the loan balance.
And here, the answer is more complex, as it hangs on your relationship building with the lender. Most won't begin repossession until you miss three or more payments, but, as mentioned, they have the right to act after the first instance. The only solution is to try and build a positive relationship.
In some states, a lender can repossess your vehicle if your payment is just 1 day late. Most lenders wait at least 60 to 90 days before taking steps to claim possession of your car. The terms of your loan may also dictate how long the lender must wait to repossess your car.
You can sell your car to get rid of it without hurting your credit. This is easiest if the value of your car is close to or above the balance of your loan. You could also transfer your current loan to another person if they're approved for financing and agree to take it over.
The agent will usually be equipped with a duplicate key for the vehicle, but could also enter the car by picking the lock and hot-wiring the engine. In some states, lenders are not required to issue you a notice if they are about to repossess your car.
Voluntary repossession is a losing proposition, not only because it's unlikely to provide any tangible benefit to your credit score or wallet, but also because it might mean sacrificing your ride to work –jeopardizing your ability to pay other bills. Plus, you likely have better options that have yet to be exhausted.
Having your car repossessed or surrendering it voluntarily is seen as a major negative event by lenders. They'll view you as high-risk. Expect your credit score to take a big hit, maybe over 100 points or more. That makes getting approved for financing in the future much harder.
Collections
If you don't pay the remaining balance and repossession fees, the account may be turned over to collections. The collections account can appear on your credit reports and will stay for seven years from the time the original account became delinquent.
Estimates vary, but you can expect a voluntary repossession to lower your credit score by 50-150 points. How big of a drop you will see depends on factors such as your prior credit history and how many payments you made before the repossession.
The result has been a dramatic increase in the percentage of subprime borrowers falling at least 60 days past due on their auto loans. In January 2023, 5.93 percent of subprime borrowers were delinquent, compared to only . 28 percent for prime borrowers.
Struggling To Stay Afloat
Fitch Ratings recently unveiled a concerning statistic: the delinquency rate on +60-day past-due subprime auto loans reached a record high reading in September 2023, hitting 6.11%. This alarming trend persists, with the rate remaining elevated at 6.00% as of October 2023.
A record number of subprime borrowers are behind on auto loan payments by more than 60 days. The rate hit 6.11% in September, per figures from Fitch Ratings reported by Bloomberg. Vehicle repossession rates are also on the rise, leaving many without transportation.
Often, a bank or repossession company will let you get your car back if you pay back the loan in full, along with all the repossession costs, before it's sold at auction. You can sometimes reinstate the loan and work out a new payment plan, too.
How long does CapitalOne take to repossess my car? Repossession law varies slightly from state to state and range from 3 to 5 months after you stopped making payments on your CapitalOne loan.
You could make up for the payments you've missed by paying the debt and any late fees. Redeeming the car — If your vehicle has already been repossessed, you have a right to redeem it up until the point the vehicle is resold. To do this, you would need to pay everything you still owe on the vehicle loan.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
Assuming the collection information is accurate, the collection account can stay on your reports for up to seven years plus 180 days from the date the account first became past due.
According to the Fair Credit Reporting Act (FCRA), negative items can appear on your credit report for up to 7 years (and possibly more). These include items such as debt collections and late payments. The time frame begins from the original date of the delinquency (the date of the missed payment).