How Late on Car Payments Can You Get?

You don't want your car to be repossessed, and neither does your lender.

There are two ways that property can be repossessed. The most frequent scenario is when a tow truck pulls up and removes your car, sometimes with notice and more often without.

In other situations, you could have the choice to perform a "voluntary repossession," in which you hand over your car to the lender. "While this does build some goodwill and lower the amount owing and collection expenses, the benefits to the consumer are not large unless a specific deal has been agreed with the lender," says Sullivan.

A starter interrupt device, which remotely disables a car's ignition system if a borrower misses payments or defaults, is another strategy utilized by certain lenders in addition to physically taking the vehicle away (if state law permits it), according to Sullivan. "The shutdown can be done to facilitate repossession or it can be temporary until a payment is paid."

Your ordeal is not done once your car has been stolen. You can still be responsible for additional costs like towing and storage, and the lender has the right to legally pursue you to recover them. If you've defaulted, it will take years to repair the harm to your credit.

The worst case scenario for both the borrower and the lender is repossession. For a consumer who was just hanging on and was caught up in an emergency, illness, or job loss, foreclosure can be a life-changing event, according to Sullivan.

When lenders seek a repossession, they often lose money.

Since debtors sometimes owe more on their vehicles than they are worth, especially after months of nonpayment, Sullivan adds that it is expensive to seize and sell them. Moreover, they rarely sell for the amount owing. Additionally, pursuing legal action to attempt to have the consumer pay the difference owed is another expense with no assurance of success.
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