Your lender will contact you, usually within 30 days, and you'll owe a late fee
When you miss a car payment, your lender doesn't when ready repossess the car. Instead, they send you a notice — by mail, phone, email, or all three — telling you the payment is overdue and how much you owe including a late fee. This fee is typically between $25 and $75, depending on your loan agreement. You have a grace period, usually 10 to 15 days after the due date, before the payment officially counts as late on your credit report.
If you pay during this grace period, you avoid the late fee and the credit damage. If you don't, the lender reports the missed payment to the three credit bureaus — Equifax, Experian, and TransUnion — and it appears on your credit report as a 30-day late payment. This when ready lowers your credit score, which affects your ability to borrow money in the future and can raise the interest rates on other debts you already have.
Key Takeaways
- A late fee of $25 to $75 is added to your next payment, and your lender will contact you within 30 days of the missed payment.
- If you pay within the grace period (usually 10 to 15 days), you avoid the late fee and the credit report damage.
- After 30 days late, the missed payment appears on your credit report and your credit score drops, making future borrowing more expensive.
- After 60 to 90 days late, your lender may repossess the car, and you will still owe the remaining loan balance plus repossession costs.
- Contacting your lender before the payment is due to discuss hardship options is faster and less damaging than waiting for them to contact you.
What happens at 60 days late
If you miss two consecutive payments, your lender can legally repossess the car. Most lenders wait until you're 60 to 90 days behind before they actually do it, but the right to repossess kicks in much earlier — sometimes after just one missed payment, depending on your loan contract. Repossession means a tow truck shows up and takes the car without warning, usually in the evening or early morning.
After repossession, the lender sells the car at auction. If the sale price is less than what you still owe on the loan, you're responsible for the difference — called a deficiency. You also pay the repossession company's fees, storage fees, and auction costs, which can total $1,000 to $3,000. The lender can sue you to collect the deficiency, and if they win, they can garnish your wages or place a lien on your bank account.
How this affects your credit
A 30-day late payment stays on your credit report for seven years and typically drops your score by 100 to 150 points. A 60-day late payment is worse — it signals to future lenders that you're at serious risk of default. A repossession is the most damaging: it stays on your report for seven years and can drop your score by 130 to 200 points.
The damage decreases over time, especially if you make all your payments on time after the late payment. After two years of on-time payments, the impact on your score is noticeably smaller. After five years, it matters much less. But during those first two years, you'll pay higher interest rates on car loans, mortgages, credit cards, and personal loans — sometimes 2 to 5 percentage points higher than someone with good credit.
What to do if you can't make a payment
Call your lender before the payment is due, not after. Explain that you're having trouble and ask about forbearance or deferment. Forbearance means the lender temporarily reduces or pauses your payment for one to three months. Deferment means they push your missed payment to the end of the loan, so you pay it later instead of now. Neither option erases the payment — you still owe it — but both keep you from falling behind and damaging your credit.
Some lenders also offer loan modification, which changes the terms of your loan to lower the monthly payment permanently. This usually means extending the loan by a year or two, so you pay less each month but more interest overall. Ask your lender what options they have before you miss a payment. Most lenders have hardship programs specifically for this situation, and they'd rather work with you than repossess the car.
If you're already behind and can't catch up
If you're already 30 or 60 days late and can't afford to catch up, you have a few paths. The first is to refinance the loan with a different lender — pay off the old loan with a new one that has a lower payment. This works only if your credit score hasn't dropped too far and you have some equity in the car (meaning it's worth more than you owe). The second is to sell the car yourself, use the money to pay off the loan, and walk away. If you owe more than the car is worth, you'll need to cover the difference out of pocket.
The third option is to let the repossession happen and deal with the aftermath. This is the most damaging to your credit, but if you can't afford the car and can't refinance, it may be your only choice. After repossession, the deficiency judgment will still come, but at least you're not paying for a car you can't keep. Some states have laws that limit how much a lender can collect after repossession, so research your state's rules before you decide.
How to rebuild after a missed payment
If you've already missed a payment but caught up before repossession, focus on making every payment on time from now on. Set up automatic payments from your bank account so you can't forget. If you can afford it, pay a little extra toward the principal each month — this shortens the loan and saves you interest. The on-time payments will gradually improve your credit score, and after 24 months of perfect payment history, the damage from the late payment becomes much less visible to lenders.
If you were repossessed and now have a deficiency judgment, pay it off as soon as you can. Once it's paid, you can dispute it from your credit report if the lender doesn't remove it themselves. A paid judgment still shows on your report, but it's less damaging than an unpaid one, and it shows future lenders that you eventually made it right.
Frequently Asked Questions
Can the lender repossess my car if I'm only one day late?
Legally, yes — most loan contracts allow repossession after even one missed payment. In practice, lenders usually wait 60 to 90 days because repossession is expensive and they'd rather get paid. But the right to repossess exists when ready, so don't assume you have time.
Will I still owe money after the car is repossessed and sold?
Almost certainly. If the auction price is less than what you owe, you owe the difference plus repossession and storage fees. The lender can sue you for this deficiency, and if they win, they can garnish your wages or freeze your bank account.
Does missing one payment ruin my credit forever?
No. One 30-day late payment drops your score significantly, but the damage decreases over time, especially if you make all future payments on time. After two years of on-time payments, the impact is much smaller. After seven years, it falls off your report entirely.
What's the difference between forbearance and deferment?
Forbearance temporarily reduces or pauses your payment for a few months. Deferment pushes your missed payment to the end of the loan so you pay it later. Both keep you from falling behind, but you still owe the full amount eventually.
Can I refinance my car loan if I'm already late?
It's harder but sometimes possible. If you're only 30 days late and your credit score hasn't dropped too far, some lenders will refinance. The interest rate will be higher than if you had perfect credit. Once you're 60+ days late, refinancing becomes nearly impossible.