How Late Can You Be on a Car Payment, Mortgage or Other Bill?

More than 10% of subprime auto loan customers were behind on payments by 60 days or more in early 2021. Were you one of them? Whether or not you fall under the subprime category, it can be surprisingly easy to miss an auto payment—or any other debt. So, when do you know that you have a late car payment on your hands? And what do you do?

You’ve got questions—we’ve got answers. We’ll break down when a car payment is late, as well as other common loans, so you’ll be prepared to pay your loans on time.

In This Piece:

• How Late Can You Be on a Car Payment?
• How Late Can You Be on a Mortgage Loan Payment?
• How Late Can You Be on Credit Card Payments?
• How Late Can You Be on Student Loans?
• How Late Can You Be on Utility or Cell Phone Bills?
• How Late Can You Be on Insurance Premiums?
• Tips for Avoiding Late Fees
• Getting Late Payments off Your Credit Report

How Late Can You Be on a Car Payment?

So, how late can you be on a car payment? Many lenders give borrowers a grace period before they technically consider the payment late. This grace period typically ranges between 10 and 15 days past the official due date. Lenders consider any payment not made within this allotted time frame a late payment.

Since each lender has its own terms and conditions, it’s important to read the terms of your auto loan. These details can help you determine when your payment is due and how long you have before your lender considers it late.

What Are the Consequences of Being Late on a Car Payment?

Being late on just one car payment is likely to result in some type of consequence. Below is a look at the consequences you can expect when you fail to make on-time payments for your auto loan.

Late Fees

If you’re late making your car payment, the lender may charge you a late fee. This fee is often a set percentage of your overdue balance, but it could also be a flat rate.

For example, if your car payment is $350 per month and your lender assesses a 5% late fee, your lender may charge you a late fee of $17.50. Now, instead of owing $350, you’ll owe a combined total of $367.50. Your lender is also likely to contact you to make payment arrangements. 

Negative Impact on Credit Score

Auto lenders can report any late payment to credit reporting agencies as soon as the set grace period is over. However, many lenders wait at least 30 days before making this report. Some may even wait until you’re 60 days late on your payments before issuing a 60-day late notice to the credit reporting agencies.

A missed payment report from your lender to the credit bureaus could negatively impact your overall credit score. In fact, your payment history accounts for up to 35% of your credit score.

Car Repossession

It’s important to realize that an auto loan is a type of secured loan. The vehicle you purchase serves as collateral for the loan. Therefore, if you fail to make your payments, the lender has the legal right to take your car. This process is referred to as repossession.

Laws regarding car repossessions vary from state to state. In most cases, the lender isn’t required to notify you before repossessing your car. However, the lender usually must notify you after taking possession of your vehicle and give you a chance to make your payments plus any additional fees.

If you fail to do so, the lender can sell your car. You may be responsible for paying the difference between the remainder of your car loan and the car’s sale price.

How Late on Your Car Payments Can You Be Before the Car Is Repossessed?

In some states, a lender can repossess your vehicle if your payment is just 1 day late. Most lenders wait at least 60 to 90 days before taking steps to claim possession of your car. The terms of your loan may also dictate how long the lender must wait to repossess your car.

How Late Can You Be on a Mortgage Loan Payment?

Mortgage loans often have grace periods too, so check your loan agreement. If the grace period is 10 days, for example, as long as your payment arrives within that time, it won’t be considered late. Otherwise, you may be charged a late fee.

As with car loans, mortgage lenders usually don’t report late payments to the credit bureaus until you’re more than 30 days behind on a payment. If you fall too far behind on payments, the mortgage lender may initiate foreclosure proceedings. While state laws vary, you typically have to be 120 days past due or more before lenders start foreclosure proceedings. 

Rent is a bit different. It all depends on your agreement with your landlord, so ensure you read your lease carefully.

How Are Late Fees Calculated on Your Mortgage?

Making a late mortgage payment can cost you. Many lenders assess a late fee based on a percentage of your monthly mortgage payment or charge a set fee. For example, if your mortgage payment is $1,500 per month and the lender charges a 5% late fee, you’ll owe a $75 late fee. If you miss a second mortgage payment, you’ll accrue even more late fees.

As you can see, these payments can start to add up, especially if you make multiple late payments throughout the year. You can find the exact amount your lender can charge for late fees in your mortgage documents. These documents should also detail the length of the waiting period before a payment is considered late. It’s best to always make your mortgage payments on time so you can avoid these late fees.  

How Many Late Payments Can You Have Before You Face Foreclosure?

Foreclosure rules and regulations vary between states and lenders. In most cases, lenders won’t start the foreclosure process until you’re four months behind on your mortgage payments.

Once you’re 90 days behind on your mortgage payments, your lender may start the pre-foreclosure process. It may send you a letter stating that you have 30 days to bring your account up to date by making your missed payments plus any fees. If you don’t respond to this letter within the allotted 30 days, your lender will likely start the foreclosure process.

How Late Can You Be on Credit Card Payments?

The Consumer Financial Protection Bureau notes that credit card companies can’t say you made a payment late if it arrives by 5 pm on the due date on your statement. If the due date falls on a Sunday, holiday or another day that the credit card company doesn’t process mail or payments, the payment has until 5 pm the next business day to arrive.

Grace periods do exist on many credit card accounts, so make sure you know the details of your agreement. Credit card companies begin reporting late payments to the credit bureaus once you’re 30 days or more past due.  

All credit card accounts have different rules. But most of the time, you must miss a number of payments in a row before the account is sent to collections.

How Late Can You Be on Student Loans?

Many federal student loans provide a 15-day grace period. Ensure you check the details for your student loan, though, and know that private student loans have their own terms and conditions.

As with the other types of loans discussed above, if your payment arrives outside of the grace period, you may be charged a late fee. If you fall more than 30 days past due, the missed payment could be reported to the credit bureaus. 

Federal student loans don’t go into default until 270 days past due. At that point, the lenders may be able to garnish your wages and other income sources. Private lenders have to go through legal channels, suing you once you default and getting a court order for garnishment. 

How Late Can You Be on Utility or Cell Phone Bills?

Some utility and cell phone companies offer a grace period, but others may not. If your payment is late or past the grace period, you may be charged a late fee on your next bill.

How late you can be without an interruption in service depends on a variety of factors, including the company, your standing with them, and whether you’ve contacted the business for assistance. Many businesses allow you to miss a few weeks to a month before interrupting your service. If you know you can’t pay right away, though, most utility and phone companies have payment options they can offer.

How Late Can You Be on Insurance Premiums?

Whether or not your insurance company—auto, health, or life—charges a late fee if you miss your due date by a few days depends on your contract. Most insurance policies are paid at least a month in advance, which means there’s a little wiggle room for coverage. Because of this, missing a payment may not automatically mean you lose coverage immediately. However, you should always contact your insurance company to be sure.

Tips for Avoiding Late Fees

Missing a payment is understandable. Life gets busy, and a bill might be forgotten. Or, you may be juggling finances and be unable to make the payment exactly on time. But late fees can add up, making it that much harder to balance your income and expenses. Here are a few tips to avoid late fees:

• Set up automatic payments so you never miss a bill. Just make sure to keep enough money in your account for this purpose. 
• Sign up for notifications with your lender. Most lenders offer options for receiving emails or text messages when your due date is approaching.
• Know your grace periods. Don’t rely on grace periods every month, as it’s easier to miss them when you use them all the time. But do know what they are in case you need to stretch a payment.
• Ask the lender to waive a late fee. If you’ve always paid on time before, your lender might offer a one-time courtesy forgiveness of a late payment, including waiving the late fee.

Getting Late Payments off Your Credit Report

Once a late payment hits your credit report, it can reduce your credit score and make it harder to get credit in the future. You can’t force anyone to remove accurate data on your credit report.

However, if you have a good relationship with the lender, you might ask them if they’ll forgive the late payment and remove the item from your credit report. If you can offer an explanation of why the late payment occurred and you haven’t been late before, the lender might be inclined to do you that favor.

And if you find a late payment on your credit report that’s not accurate, you can challenge the information. Mistakes do happen, and the credit bureaus must investigate a dispute and remove the negative information from your report if the lender doesn’t provide documentation to support it.

Sign up for ExtraCredit® to get access to your credit report so you know what’s on it. ExtraCredit provides a number of other benefits, including discounts to a leader in credit repair and other tools to help you work toward your credit goals. 

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