How Many Missed Car Payments Before Repossession?

Missing your car payment can happen to anyone. An unexpected expense pops up, you lose some income, or any number of life events can make that monthly car payment difficult to handle. But at what point does missing payments put you at risk for your vehicle getting repossessed?

What Is Repossession?

When you finance or lease a car, the lender maintains ownership of the vehicle until you finish making all your payments. If you fall behind on payments, the lender has the legal right to take back the car, which is known as repossession or “repo” for short.

Once repossessed, the lender will sell the car to try to recoup the remaining loan balance. If the car sells for less than what you owe, you will be responsible for the difference, known as a deficiency balance.

Timeline of Missing Payments and Repossession

Most lenders and leasing companies have specific policies on when they will begin the repossession process:

  • 1 missed payment – Generally there is no immediate action after missing one payment as long as you make the next one on time. However, late fees and interest may accrue.
  • 2 missed payments – You will receive phone calls and letters demanding payment. Some lenders may start the repossession process.
  • 60 days past due – At 60 days late, the lender will issue a “Notice of Intent to Repossess” and start actively trying to take back the vehicle.
  • 90 days past due – Most lenders will repossess the vehicle once payments are 90 days past due. However, some may wait until 120 days delinquent.

So while repossession can technically happen after just one missed payment, most lenders provide a grace period of 60-90 days before taking action.

Repossession Process

Once the lender decides to repossess the vehicle, here is the general process:

  • The lender hires a repossession company to retrieve the vehicle.
  • The repo company will attempt to locate the vehicle using GPS tracking and license plate recognition databases.
  • Once located, the repo agent will wait until the vehicle is unattended before hooking it up to a tow truck and transporting it to a holding lot.
  • Within 1-2 days, the lender will send a repossession notice informing you of the location of the vehicle and the amount owed to reclaim it.
  • After a period of 10-60 days, the lender will sell the vehicle at auction. Any remaining loan balance after the sale will be your responsibility.
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Protecting Yourself from Repossession

If you are struggling to make payments, here are some tips to potentially avoid repossession:

  • Contact your lender immediately – Let them know about your situation and try to work out alternative payment arrangements.
  • Reinstate the loan – If you can come up with the delinquent amount owed, you may be able to reinstate the loan and avoid repossession.
  • Modify the loan terms – Ask if it’s possible to extend the repayment period to lower the monthly payments.
  • Refinance the loan – Consider refinancing for a lower interest rate to reduce the monthly payment.
  • Voluntarily surrender the vehicle – You can voluntarily return the car to the lender and avoid some of the fees associated with forced repossession.

The Impact of Voluntary Repossession on Your Credit

If you are unable to keep up with payments, voluntarily surrendering the vehicle is better than forced repossession. Here is how it will impact your credit:

  • Your credit report will show a repossession which can lower your score by 100-200 points.
  • The repossession can stay on your report for up to 7 years from the date of first delinquency.
  • Future loan applications will be harder and interest rates will be much higher due to the increased risk.
  • You may have trouble getting approved for financing another vehicle for 1-2 years.

While voluntary repossession hurts your credit, it shows responsibility by avoiding forced collection and related costs. Communicate with your lender, explain the hardship, and ask them to note “voluntary repossession” on your credit report.

Bottom Line

Missing just one payment isn’t likely to result in immediate repossession. But the risks grow with every missed payment after that. Once you become 60-90 days delinquent, expect the repossession process to begin. Know your lender’s policies, and if you anticipate issues making payments, ask for assistance early. Repossession can be avoided by working with your lender to modify terms or catch up on payments before its too late.


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