What to Do if You’re Late Making Car Payments

What to Do If You’re Struggling with Car Payments

Life happens—and when money gets tight, skipping a car payment can feel like a quick fix. But the short-term relief can come with long-term consequences, from credit score drops to losing your car altogether. 

At GreenPath, our financial counselors talk to people every day who are navigating these challenges. We’re here to help you stay in the driver’s seat when it comes to your finances—and your vehicle. 

If you’re falling behind on your car loan, here’s how you can get back on track. 

Why Staying Current on Car Payments Matters

A car isn’t just a convenience—it’s a lifeline. It gets you to work, helps you care for loved ones, and connects you to essential needs. When car payments fall behind, the consequences go far beyond missed bills. Staying current helps protect your financial health and your daily stability. 

• Your credit score takes a hit when payments are more than 30 days late. 
  Payment history is the biggest factor in your credit score. A late car payment can stay on your credit report for up to seven years, potentially impacting your ability to qualify for loans, rent housing, or even get certain jobs. 
• Late fees add up fast, costing you more in the long run. 
  Even one missed payment can trigger penalties, interest charges, or higher insurance rates. If the problem continues, it may take months—or more—to dig out from the added debt. 
• Repossession is a real risk—and once it happens, it’s expensive and hard to reverse. 
  Most lenders can begin the repossession process after just one or two missed payments, depending on your contract. Losing your vehicle can affect your ability to earn income or care for others. Repossession also damages your credit and may leave you on the hook for the remaining loan balance. 

Smart Steps to Avoid Missing Car Payments

Know When the Payment Is Considered “Late”

Car loan due dates don’t always come with flexibility. That’s why it’s important to check with your lender and confirm the exact terms. Many lenders offer a small grace period—say, 5 to 15 days—but that doesn’t stop them from charging late fees or reporting your payment if it goes 30 days past due. 

Mark your calendar, set a reminder, or enroll in autopay if possible. Understanding your payment timeline helps you avoid unnecessary penalties and stress. 

Understand the Late Payment Fees

Late fees can add up fast. As soon as a payment is missed—even by a day or two—your lender may charge a fee, often between $25 and $50. Over time, repeated fees make it harder to catch up and may snowball into a larger debt problem. 

Review your loan agreement or contact your lender directly to understand the fee structure. Knowing what to expect can help you build a budget that accounts for the full cost of the loan. 

Track Your Credit Activity

If you’re worried about falling behind, keep an eye on your credit. Payments reported as 30+ days late can significantly lower your credit score, affecting your ability to qualify for future loans or refinance your current one. 

Visit AnnualCreditReport.com to access your free credit reports from all three bureaus. Look for any late payment notations and verify that your report is accurate. If you spot errors, take steps to dispute them promptly. 

Talk to Your Lender

This step is one of the most important. Many people wait too long to reach out—but lenders often have options available if you contact them before the situation gets worse. 

Call your lender as soon as you anticipate a problem. Ask if they offer hardship programs, payment deferments, or modified plans. If you’ve maintained a good payment history, they may be willing to work with you to avoid delinquency or repossession. 

Understand Repossession Policies

Repossession is every borrower’s nightmare—but the rules around it vary. Some lenders begin the repossession process after just one missed payment, while others may wait longer. 

To avoid surprises, read your loan documents or ask your lender directly: How many missed payments trigger repossession? What’s their timeline? Knowing the answer can help you act quickly and stay ahead of any potential action. 

Return to Budgeting Basics

When payments become unmanageable, it’s time to rework the numbers. Start by looking at your monthly income versus essential expenses. Has your income gone down? Have certain bills increased? 

Use a budgeting worksheet or digital tool to get a clear view of your finances. Consider what non-essential costs can be cut temporarily—streaming services, dining out, subscriptions—and redirect that money toward your car payment. Getting intentional with your budget can make a big difference. 

Talk to a GreenPath Financial Counselor

You don’t have to figure this out on your own. GreenPath’s NFCC-certified financial counselors offer free support to help you take control of your situation. We’ll look at your full financial picture—credit cards, car loans, living expenses—and help you prioritize your payments. 

If needed, we can also explore a Debt Management Program, which may help lower interest rates and simplify monthly payments so you can stay on top of all your obligations—including your car.