A study in 2016 by Experian discovered that the average car payment in America is a whopping $503 per month! That’s a big chunk of change for most people. And with a vast majority of Americans living paycheck to paycheck, you’re only one small problem away from not being able to make ends meet that month. So, you might choose to skip a car payment. But what’s the result if you don’t make that payment? What happens isn’t a complete surprise, but it might have implications beyond what you expect.
If You Skip a Car Payment…
The lender is going to try to contact you. It might be a couple days or a week later. They’re going to try to work out a plan to catch up with your missed payment.If you haven’t made a habit out of missing your car payment, you might get a penalty-free period to catch up.
Your Credit Score Takes a Hit
Your car loan shows a missed or late payment on it, and it’s going to stick around for awhile on your credit report. Depending on your credit history, it could have a pretty significant impact on your credit score for just a single missed payment.
You’ll Pay Penalties
If you don’t catch up with a missed car payment or you’re regularly late, it could cost you. The lender may assess NSF charges and late fees. It’s money you don’t have to spend, and it’s obviously best to avoid it if you can.
Your Car Could Be Repo’d
Is your car payment behind by 60 to 90 days? That’s considered delinquent. If you don’t have a plan in place with your lender to get your car loan in order, they could repossess your car. If your car is repossessed, you still have options to get it back. You might be able to restructure your loan with the lender, or your could pay the amount owing (plus penalties, of course) to get it back.
It Goes Under the Hammer
If you don’t square up with your car payments, your car will get auctioned off to the highest bidder at a public auction. Usually, you can still fix the situation up until the day of the auction. If you don’t, you’ll be stuck with bad credit AND no car. The best solution? Don’t miss a car payment! If you aren’t able to make a payment for some reason, call your lender before it’s due. You can make arrangements before it becomes trouble, and you might even be able to skip a car payment penalty-free!