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From the Experts at Credit.com

What To Do If You Can’t Make Your Car Payments

by Gerri Detweiler

What to Do If You Can't Make Your Car Payments

If you find yourself unable to keep up with your vehicle loan payments, investigate the following options as soon as possible to avoid a repossession of your vehicle:

Modify Your Auto Loan

Talk with your lender to find out whether you can modify your vehicle loan. Some lenders will allow you to make lower payments for a short period of time, or even skip a payment or two, and add the deferred amount to the end of your loan. This option may be available to someone experiencing temporary financial problems, but it is not wise if your money troubles are ongoing. It’s important to discuss this option with your lender before you miss a payment.

Refinance Your Vehicle Loan

If you have strong credit, you may be able to refinance your loan and lower your payments, either by taking out a longer loan or by lowering your interest rate. The former can be a costly option but may be better than other alternatives. Your current lender may be willing to refinance your loan or you may have to shop around for a new lender. Not sure what your current score is? Find out using Credit.com’s Free Credit Report Card.

Let Someone Assume Your Loan

If you have a good car loan with a low interest rate, or even a good lease, a buyer may be happy to take over your payments. Talk with your lender – not all car loans and leases are assumable. If yours is, the buyer will likely have to meet credit and income qualifications in order to officially take over the loan or lease.

Sell Your Vehicle

Advertise your vehicle for sale and see if you sell it for enough money to pay off your current loan. If not, you will have to come up with the difference between what you sell the car for and what you owe in order to transfer the title of the vehicle to the new owner.

Turn The Keys In

Sometimes walking away from your vehicle (known as a “voluntary repossession”) is the only available option. However, keep in mind that in most states the lender can still pursue you for the “deficiency” – the difference between what you owe and what the car sells for at auction. If you are thinking of going this route, try to work out something with the lender to minimize balance you’ll still owe.

Let Your Car Be Repossessed

If you fall behind on your loan, your vehicle may be repossessed. Every state has its own laws that cover vehicle repossession. In most cases, your vehicle can’t be “repo’d” if it is locked in your garage, or even if you protest. However, if you are at risk of losing your car in a repossession, it’s a good idea to remove anything of value that belongs to you from the vehicle and to talk with an attorney so you know your rights should it be taken.

Repossession is one of the most costly options for dealing with a car you can’t afford, as the cost of taking back the vehicle and selling it may be added to your loan balance.

File for Bankruptcy

Bankruptcy can sometimes stop your vehicle from being repossessed. Or, it may wipe out a deficiency debt you owe on a car that’s already been repossessed or given back to the lender. Consult with a bankruptcy attorney to explore your options.

To learn more about managing car loans and how to find the best loan for your situation, read more from our experts by visiting our Loans Learning Center.


  • Carol

    How can I get in touch with a Bankruptcy attorney

    • http://www.Credit.com/ Gerri Detweiler

      You can search online or you may want to search the directory at the National Association of Consumer Bankruptcy Attorneys website.

  • http://www.Credit.com/ Gerri Detweiler

    Talk with a consumer bankruptcy attorney. If you own the cars outright it could be a problem because they may be an asset that is available to other creditors. If you still owe money on them, however, then you may be able to continue your payments and keep the cars. Again, you’ll want to get advice from a bankruptcy attorney as exemptions vary by state.

  • K williams

    what happen if i filed bk7 and did a reffirming with my car loan . however they still repo the car 2 weeks after the discharge for non payment. but the trustee did not officially sign-off on the documents until 2 months later.

    • http://www.Credit.com/ Gerri Detweiler

      This is a question for your bankruptcy attorney. Have you spoken with him or her?

  • Jessica

    Hi . My car taking away the bank has the car. I don’t want to do because I can’t afford the car payment and take car back.I don’t know what my next step

    • http://www.Credit.com/ Gerri Detweiler

      Jessica – Please talk with a consumer bankruptcy attorney who can look at the situation for you and make suggestions (which may or may not include filing).

  • Jan

    My son is a 100% disabled military veteran and has a monthly income of about $3800. He made some poor decisions in the past when buying vehicles and became seriously upside down. This caused higher payments, and he began having difficulty making ends meet.

    More poor decisions followed when he used credit cards and bank loans to provide the cash needed in order to make the payments and still have money for living expenses. About 6 months ago, he received a flyer from a local dealership which guaranteed to get folks into a new vehicle with lower payments than currently paying. He went in thinking this would solve his cash flow problem. Instead, the dealership reported his income to the lender as $6500 per month, which actually raised his payment, putting him even further in debt.

    I have taken over control of his finances And have him on a strict budget in order to reduce his debts. My question to you is what responsibility would this dealership have to right the wrong they committed when they lied about his income? With compromised mental health, was my son taken advantage of?

    Thank you in advance for any guidance you can provide.

    • http://www.Credit.com/ Gerri Detweiler

      Jan – I am so sorry to hear what you and your son have gone through. My first question is whether, with all this debt, he should consider bankruptcy. It may allow him to put these bills behind him and get a fresh start. If nothing else, you may want to meet with a consumer bankruptcy attorney simply to find out what his rights are with regard to the falsified income. If you would consider talking with one, you can visit the website of the National Association of Consumer Advocates. Another option is to file a complaint with the Office of Servicemember Affairs within the CFPB along with your state attorney general.

  • Jaime

    I am financing a car and recently got into a car accident which totaled the car and my car insurance will not cover to replace or repair the car. What will happen if I stop paying for the car? If they repossess the car I don’t know if they would be able to sell the car at an auction because it is totaled.

    • http://www.credit.com/ Credit.com Credit Experts

      Why will your insurance not cover the damage? (Most finance companies require that a vehicle be insured to protect their collateral.) If you stop paying for the car, it could be repossessed, yes, and you could also be sued for the difference in what it sells for at auction and the amount you still owe. (And if you lose, you could get a judgment against you and then wage garnishment to pay the judgment.) Depending on the rest of your financial situation, you might want to talk with a bankruptcy attorney about your options.

    • Charmaine

      Hi Jaime. I’m in the same exact situation! How did you handle yours or what was the outcome??

  • Jaznelly Rodriguez

    I brought my car a year ago and I’ve been having problems with the vehicle ever since I brought it. I always make my payments on time but I can’t deal with it anyone its not self for me and children. And Yes I took it in many times to get fix and the problem remains . What should I do ? I don’t want to mess up my credit :(

    • http://www.credit.com/ Credit.com Credit Experts

      Jaznelly —
      Was this a new car? If so, lemon laws may help. (See: Are You Driving a Lemon?). If not, does the dealer or your mechanic have any sort of warranty on the work done on your car? Sometimes, unfortunately, the best solution may be to sell or trade it if it appears it won’t be reliable and you have no other recourse.

      • Jaznelly Rodriguez

        it is a used vehicle

        • http://www.credit.com/ Credit.com Credit Experts

          That makes it a lot harder. Simply not paying will definitely hurt your credit. Trading it in might be your best option. Have you investigated that at all?

          • Jaznelly Rodriguez

            i just feel like this company charges way to much. I always pay on time. I just don’t want the car any more. It has to many problems and my kids safety is more important to me.

          • http://www.credit.com/ Credit.com Credit Experts

            It sounds like selling or trading are your best options. Stopping paying because you feel you are being overcharged could result in a repo and your being sued for the difference between what you owe and what the car sells for at auction. And it would badly hurt your credit score. If you can get out of the car you believe is dangerous and into one that is safe without sacrificing your credit, that is your best option.

  • bebang

    hi! me and my husband bought a car last NOVEmber 2104 but im paying for it. Im planning to leave the country and my husband doesnt want to keep the car anymore and just let me decide what to do with it. whats the best way to do with the car?

    • http://www.credit.com/ Credit.com Credit Experts

      Can you sell it? (If it was a used car, you may be able to get somewhere close to what you paid.)

  • Robin Jestice Robinson

    I just got a brand new car through finance company but lost my job, but still have on going SSI, Which was included as part if my income…my credit is poor to average so refinancing is out of the question I would think…what do I do ??
    How long will it be before they repossess with partial payments or no payments?

    • http://www.Credit.com/ Gerri Detweiler

      Robin – I am so sorry to hear about your job loss. How long it will take them to repossess the vehicle depends on state laws. Why don’t you talk with a consumer bankruptcy attorney? It may be possible for you to hold on to your vehicle while you try to find work, and if not the attorney can help you minimize the financial fall out.

  • Ronnie

    My car had been in repossession status, but they never picked it up. Now it’s charged off on my report. My car has recently been in an accident..will my insurance cover my car?

    • http://www.Credit.com/ Gerri Detweiler

      I have no idea. I’ve never heard of this before. Can you let us know what you find out from your insurer?

  • Stan

    I have an RV that I am selling and have discovered the principal balance owed is over $10,000 more than my amortization table says it should be. I was granted three skipped payments in the first three years, but have paid over the amount owed in the last 5 years. When I deduct the late charges paid, and the interest charges for the skipped payments, I come up with the exact difference in over payment of interest, $10,000 and change. Example, My most recent interest charged on my bill, is the amount shown on the amortization table that should have been charged 29 months prior! Can a bank over deduct interest charges on a auto loan. This loan is over 8 years into the 15 year loan and I have paid over $76,000 towards the total loan interest charge of $92,000 at maturity! What can I do?

    • http://www.Credit.com/ Gerri Detweiler

      It’s possible there is a mistake? Have you contacted the lender? I’d suggest you start there but if you don’t get a satisfactory answer the next step would be to either talk with a consumer law attorney or to file a complaint with the CFPB.

  • zack

    I have a car loan and they are not reporting it it doesn’t show up on my credit or my wifes if i let it get repossessed Will it hurt my credit even though they dont report it

    • http://www.Credit.com/ Gerri Detweiler

      Just because it’s not reporting now doesn’t mean it won’t ever. Some creditors only report accounts when they go delinquent. Or if the balance is sent to collections the balance may be reported by a collection agency. However, my biggest concern is that you are thinking of just letting them repo it. If you do, you could still wind up with a big bill as they may try to collect the deficiency. I’d urge you to at least talk with a consumer bankruptcy attorney to understand your options and possible repercussions.

  • Deb

    I used to lease my car but I’m now financing a new car. My payments are a little higher so I’ve been making my monthly payments in installments. I live in New York so I have a grace period of 10 days before I incur a late payment. The financing company has advised me to pay my car note in full and not installments because that they say that it can mess my credit up. Is this true?

    • http://www.Credit.com/ Gerri Detweiler

      I’m sorry but I truly don’t understand the scenario you’re describing. Can you be a little more specific?

  • Carlino King Iz

    I have 2 car loans one a 2011 that I just acquired in February and one 2008 that is from 2013 the one from 2013 just got repossessed should I get it back ..its kinda crappy now..or let it stay repossessed and get a newer model my 2011 car note is up to date

    • http://www.credit.com/ Credit.com Credit Experts

      Carlino —
      We can’t make such decisions for you. We can tell you that letting it stay repossessed will not necessarily relieve you of financial responsibility for it. You are likely to have to pay the difference in what the car sells for plus repo expenses (storage, legal), at the very least. A repo also severely damages your credit and will make it more difficult (and expensive) to finance another car.

  • Daiquan Frasier

    I went in to co-sign my girlfriends car and ended up actually being the owner and she being the co-signer. We broke up and she ended up totaling the car in a car accident and I can’t afford the payments at all.. What should I do?

    • http://www.credit.com/ Credit.com Credit Experts

      Daiquan —
      Whether you were the primary owner or co-signer doesn’t make any difference when it comes to financial responsibility. Did you have insurance on the car? That might provide some money for payments. Sadly, you are not alone in finding out about the financial responsibility co-signing involves through experience. You can read more about co-signing here: How Co-Signing Can Affect More Than Just Your Credit Score

  • http://www.Credit.com/ Gerri Detweiler

    Please talk with a consumer bankruptcy attorney asap. you need to a. find out how repossession works in your state and b. consider whether you need to file bankruptcy if you aren’t able to find a suitable job quickly. Doing so may help you keep the car while you get back on your feet.

  • Daiquan Frasier

    Well she took off collision and left only the liability. The last payment she made on the car was back in August of 2014. I’m scared that they will begin garnishing my check soon if this isn’t taking care of soon. What are my best options here please?!

    • http://www.credit.com/ Credit.com Credit Experts

      Have you spoken with a bankruptcy attorney or a credit counselor? They won’t garnish your check unless and until there is a court order. So very sorry this is happening to you.

  • Larry

    I have an auto lease and the payments are too high; ($750.00) if I turn the vehicle in to the dealer what will happen. What are my options if any I have only been in this lease for three months

    • http://www.Credit.com/ Gerri Detweiler

      We have written an article on that topic, and although it’s about a car loan the same principles apply: .Can I Return My Car to the Dealer?

      An alternative might be to try to find someone to take over your lease through a site like Swap a Lease or Lease Trader…

  • http://www.credit.com/ Credit.com Credit Experts

    You should, but it will also be less any expenses (repossession, listing, selling expenses, etc.)

  • http://www.credit.com/ Credit.com Credit Experts

    Sid — Indeed you can refinance a car loan. We wrote about it here:Can You Refinance a Car?

  • Chad

    I bought a new car last week, on Monday my wife was notified her hours will be drastically cut. With this news we will not be able to afford the car note. Do I have any options?

    • http://www.credit.com/ Credit.com Credit Experts

      Chad —
      Read your contract very carefully — particularly the fine print. If there is a chance that this reduction in hours would result in the loan not being approved, it’s possible that it will be. That’s not great news for most people who think they have bought a car, but it could be useful to you. You can read more about that here:
      Help! I Just Bought a Car & Then Was Denied for the Loan

      Good luck to you.

  • dott

    I had to retire in march due to illness . right now receiving social security but it it little amount. having hard time paying car payment of 402.62 and finance company will not refinance. what is best avenue to go?

    • http://www.credit.com/ Credit.com Credit Experts

      Dott —
      That sounds like a difficult situation. Do you still need the car? If you sold it, could you pay off your loan and perhaps buy a less expensive car? It’s also possible to refinance with a completely different financial institution. You can read more about that here: Can You Refinance a Car?

  • worried

    if i let it go back by turning in the keys what is the differents that i owe is it the amount that i bought the car for or the whole loan full term

    • http://www.Credit.com/ Gerri Detweiler

      It is the total balance owed, plus allowable costs associated with taking the car back and selling it, minus the proceeds from selling the vehicle.

  • Irie

    My fiancé got a car loan without having a job and the person at the car dealer knew he was going to have to pull some strings to get her the loan is that legal?

    • http://www.Credit.com/ Gerri Detweiler

      Did the finance guy falsify documents? I don’t know exactly what you mean by pulled some strings…

      • Irie

        I believe he may have falsified documents

        • http://www.Credit.com/ Gerri Detweiler

          My advice is to talk with a consumer law attorney to find out what your options are.

  • Jc

    Will claiming bankruptcy stop the repo of my car and if I keep the car through the bankruptcy can I start fresh with car payments?

    • http://www.Credit.com/ Gerri Detweiler

      Yes bankruptcy may stop the repo of your car, and you may be able to make more affordable payments. But to find out specifics about your situation, you’ll need to talk with a consumer bankruptcy attorney.

      • Jim Buchan

        if 99.9% = “may stop” BK laws are the macdaddy law of the land and it will halt everything. of course BK is different these days, the days of chap 7 erasing everything are gone. If you have a job= you will pay something for 5 years. BK SHOULD BE THE LAST RESORT BUT IF you must dont fear it.

  • Jorge

    If I let them repossess my car do I still owe the balance on the car or no

    • http://www.Credit.com/ Gerri Detweiler

      In most cases, yes. If the car is sold for less than what’s owed (plus legally allowable repo costs) they can try to collect the deficiency.

  • DC Wilson

    I purchased a car in 2013 – I was able to make the payment. I cant now due to the new responsibility of taking car of a sick elderly parent. I have sent letters to the financial company and they have been ignored. Even called to discuss and was told someone would call me back and no one has – made three attempts. I am between a rock and a hard place – I cant afford the car without negatively effecting the care financially of my parent – help please – I have had GREAT credit for over 40 years too.

    • http://www.Credit.com/ Gerri Detweiler

      I can’t imagine how stressful this is for you. Start calling again–don’t rely on letters. Ask to speak to a supervisor. Be polite but persistent. In the end, though, they aren’t obligated to modify the terms of the loan so you may want to also talk with a consumer bankruptcy attorney so you can find out what your options are if they won’t work you. (It may be possible for the attorney to negotiate on your behalf as well.)

  • Xtinaaaaa

    I recently got in a car accident the car is totaled doesn’t work and not worth taking back at the time I didn’t have money to pay my insurance so guess what crashed without insurance. I don’t know what to do now with my car payments and I deffinatly don’t want bad credit now I have to pay my medical bills from hospital and the other vehicle involved in the accident car bills for damages since I’m at fault. How can prevent bad credit I would continue paying the car till it’s pay off but now my bills have pulled up with this accident what can I do help!?

    • http://www.Credit.com/ Gerri Detweiler

      Unfortunately this may be a situation where you just can’t do everything you want to do. You need to get advice from someone who can go over the entire situation with you and figure out what you can afford to do. I’d encourage you to talk with a consumer bankruptcy attorney to discuss your options.

  • Maria Contreras

    I bought my car from a buy here pay here… Unfortunately, the company owner died and his widow turn my account to US Auto Credit. How can I voluntary repossess my car ?

    • http://www.credit.com/ Credit.com Credit Experts

      Maria —
      As the story above says, voluntary repossession is not usually a good way to go. You will still owe for the difference between what they car sells for and what you owe, after expenses. So you may well still have a debt and not have a car. It would be better if you could work out financing. Or, if you can sell the car, that might be preferable.

  • Leo S.

    I bought a Mini Cooper and I’ve had it for 2 years now at a payment rate of
    $350 a month, with a down payment of $3,000. Since the purchase, I have
    invested in a new Transmission for $5,000, Tires $800 and a Windshield for
    $300. I have fallen behind due to lack of work and it’s my first 30+ days late on
    the vehicle. Do I have any rights? I have called the creditor and all they can tell me is that “These were all my responsibility” and that they could do nothing for me.

    Do I have any laws or any rights left? I truly feel that I was doing right by the
    creditor by getting it fixed and continuing my payments and getting the car fixed.
    I could have easily turned around and walked away from it all but I didn’t because
    I truly wanted to fix my credit.

    Thank you in advanced for the reply’s any advice would be a good help.
    I’m in California.

    • http://www.Credit.com/ Gerri Detweiler

      I am not aware of any law that gives you leeway on the loan because you fixed the car. California does have a strong lemon law, though, and perhaps you have some recourse under that law. You’ll need to talk with a consumer law attorney in California familiar with the lemon law. You should be able to get a free consultation.

  • Dan T

    I have a brand new car I got in September 2014 and it’s a year 2015. Car payments 640.00! Went back to the dealership in California to refinance but was rejected due to bad credit. Is there any hope? I’m not behind but that’s where I’m headed. Can you help? What can I do?

    • http://www.Credit.com/ Gerri Detweiler

      I would suggest two things: one is to talk the lender to see if they offer a hardship program that may help. If not, then contact a credit counseling agency to see whether they may have some ideas for you.

  • Rayshun D

    Are you able to obtain a car title that has been charged off?

    • http://www.Credit.com/ Gerri Detweiler

      Are you asking whether you can get the title on your car when the debt was unpaid and charged off? It’s unlikely. The charge off doesn’t mean the debt isn’t still owed. It may still go to collections.

  • Carlos Luna

    I have had my car for 5 months my payment is 330 but I will soon be getting married and getting my own place. I have tried to advertise my car and have someone take over loan on my car and everyone is just trying to get a notarized agreement and keep the car under my name. I won’t be able to make my next payment. I filed a ch 7 BK last year and it was discharged successfully, should I look in to filing another one I don’t have the money to keep making my payments at 330. The car has check engine light on and needs full maintenance as well as a suspension issue. I am with Consumer Portfolio Services they are the finance company.
    Thank you!

    • http://www.Credit.com/ Gerri Detweiler

      Please don’t let someone take over your car payment without the lender’s involvement and a formal assumption. That’s incredibly risky. You’ll still be the legal owner of the car and if there are tickets or accidents, you could be on the hook.

      Because your bankruptcy was so recent I am not sure you will be eligible to discharge this debt, but please reach out to your attorney for advice. He or she is familiar with your financial situation and will hopefully have some suggestions for you.

  • Kristina

    If my car is up for repossession but not taken and I am able to pay the amount owed will they still take my car?

    • http://www.credit.com/ Credit.com Credit Experts

      Call to check. If you were up to date on payments it would be hard to understand why anyone would take your car (or have a right to).

  • carla

    Hi,

    I just purchased a car November 2014. The monthly payments are getting to be too high ($600). What is the best thing to do? Ideally I’d like to sell, but I do have a loan out for the car and still owe money on it. the pay-off amount is somewhere around $35,000. Will I just need to sell it to someone for more than that? And what if they finance it, is that okay? I also have yet to miss a payment and am always on-time with payment

    • http://www.Credit.com/ Gerri Detweiler

      If you can sell it for enough money to pay off your loan, that’s ideal. (If your buyer can get used car financing then they can use loan proceeds to pay off the loan.) If you can’t, then you’ll have to decide if you can come up with the difference out of your own pocket or try some of the other options listed.

    • David

      I have a truck payment going on bit i got 4 credit cards that i can pay its eigther my truck payment or the credit cards if i stop pauing the cards would i have any chance ofe loosing the truck even tho i make my payments on time

      • http://www.Credit.com/ Gerri Detweiler

        Your truck is a secured loan. If you want to keep the truck, you’ll want to make those payments on time. We wrote about your other question here: Can Debt Collectors Repossess My Car?

  • Ben

    Hello I’m in a real difficult situation, I have a car loan for a car that has been in an accident and I had insurance with a terrible company. Now the car has ceased to work now my co-signer and I are trapped. I fixed the vehicle as much as I could but the lender didn’t want the car back and I tried to trade it in but was unsuccessful. I’ve fallen 2 payments behind due to paying for taxi’s and public transportation. I tried to make partial payments but they threatened to garnish the wages of my co-signer and I. What can we do to keep our credit in good standing since the car has become a pain in both our sides?

    • http://www.Credit.com/ Gerri Detweiler

      Ben – I wish I had an answer for you but unless you can catch up and/or pay off the car loan both of you risk further credit damage. You could consider bankruptcy if this is truly too much but then the entire burden will fall on your co-borrower.

  • shanice

    I barely got my car 5 months ago and literally every month there’s something wrong with it and I can’t keep up with it every 2 weeks, I just want to know the best option and route to go on?

    • http://www.credit.com/ Credit.com Credit Experts

      Shanice —
      If it is a new car, lemon laws may offer some protection. If the car was used, you have a trickier problem. One way to deal with it would be to sell the car, hopefully at least for as much as you owe.

      • Shanice

        It’s a 2007 Ford Fusion and I’ve only had it for 5 months how would I go about that even if it’s a $1500 fix?

        • http://www.credit.com/ Credit.com Credit Experts

          That is a tough problem — and it is one of the risks you take when you buy a used car without a warranty. If you can fix it and sell it for what you owe on the car, plus the fix, that is ideal, but it sounds as if that’s not realistic for you.

  • http://www.credit.com/ Credit.com Credit Experts

    Certainly you could try to sell the jeep. If it’s possible to recover what you owe, that’s ideal. But even if it’s not, you may do the math and decide it’s worth it if insurance and maintenance costs drop enough to help you budget. (And you can’t discount the value of feeling less stress.)

  • Minerva

    I recently got a car out the dealer about 3 months ago and I recently lost my job so I can’t make the payments they are too high , any suggestions!??

    • http://www.Credit.com/ Gerri Detweiler

      Minerva – Sorry to hear that. It has to be incredibly stressful for you. I would like to give you a simple answer but unfortunately there isn’t always one. We tried to outline options in the story above. My suggestion is you talk with the lender and at least meet with a consumer bankruptcy attorney so you understand your rights and responsibilities if you have to give the car back.


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  • Meet Our Expert

    gerri_detweiler GravatarGerri Detweiler is Credit.com's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.
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