Car Loan

What Happens If I’m Late On Payments

What Happens If I’m Late On Payments

When you opt for a three or five year auto loan there inevitably will come a time when you’re in danger of making a late payment or you miss a payment. These loans are 36 or 60 months long and it can be difficult to maintain a perfect payment history. The question is though, what happens if you miss one monthly car payment?

Credit Score

Missing just one payment can have devastating effects. If you have been working hard to improve your credit score, one missed payment will make it drop dramatically. The good news is that the score will recover in a few months. But expect a significant ding to your score in the short term.

Late Fees

By missing a car payment you are also going to be hit with late fees. So now not only are you paying for your car and paying for interest, but you’re also giving them late fees. This late fee does not go toward reducing the balance of your debt so you can consider this money to be completely wasted.

Don’t Worry

If you did miss one auto loan payment due to forgetting or another accidental mishap, you need not worry. Your vehicle will not be repossessed simply by missing just one payment. Your future payments will not go up due to this missing payment. You should pay the missed payment as soon as you can and make sure that you are not late again.

If this is your first time being late, you can be proactive and contact your lender and let them know of the situation. If you are able to make the payment at that time, do so. Furthermore, you can ask them if they can waive the late fee as well. Most of the time this request is granted if you have a steady history of timely payments.