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From the Experts at

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’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

    • Gerri Detweiler

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

  • 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.

    • 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

    • 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.

    • 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.

    • 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 :(

    • 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

        • 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.

          • 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?

    • 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?

    • 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?

    • 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?

    • 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

    • 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?

    • 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

    • 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?

    • 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

  • 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.

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  • Meet Our Expert

    gerri_detweiler GravatarGerri Detweiler is'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
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