Your options when a car payment is due and you don't have the money

If you cannot make your car payment, contact your lender immediately—before the payment is due, not after. Most lenders have hardship programs that let you pause, reduce, or restructure payments without damaging your credit. The longer you wait, the fewer options remain. A missed payment typically reports to credit bureaus after 30 days, and your lender can repossess the vehicle once you are 60 to 90 days behind, depending on your loan agreement and state law.

Your lender's name and phone number are on your loan documents or monthly statement. Call the customer service number, not a general line, and ask to speak with someone in the hardship or loss mitigation department. Have your account number and loan details ready. Be direct about your situation: job loss, medical emergency, reduced hours, or unexpected expense. Lenders hear these conversations constantly and have processes built for them.

Key Takeaways

  • Contact your lender before your payment is due to discuss hardship options; waiting until after the due date closes off most programs.
  • Temporary payment reduction, deferment (moving missed payments to the end of the loan), and loan modification are common options that do not require you to surrender the car.
  • A single missed payment damages your credit score, but hardship programs typically do not report to credit bureaus if you enroll before the payment is late.
  • If you cannot keep the car, voluntary surrender is less damaging than repossession, though you may still owe the difference between what the lender sells it for and what you owe.
  • State law determines how long a lender must wait before repossessing and what they must do with the proceeds; this varies significantly by location.

Hardship programs your lender may offer

Payment deferment postpones one or more payments and adds them to the end of your loan. If you cannot pay this month but expect income next month, deferment buys time without a missed-payment report. Most lenders allow one to three months of deferment per year, though the terms vary by lender and loan type.

Temporary payment reduction lowers your monthly payment for a set period—usually three to six months—then returns to the original amount. This works if your hardship is temporary: a layoff you expect to end, a medical procedure with recovery time, or a seasonal income dip. The interest you do not pay during the reduction period is often added to the loan balance or the end of the loan.

Loan modification changes the terms of your original loan: extending the repayment period to lower the monthly payment, reducing the interest rate, or both. This is permanent, not temporary, and means you will pay interest for longer. It is useful if your income has dropped and will not recover to previous levels.

Forbearance is less common for auto loans than mortgages but does exist with some lenders. It pauses payments for a defined period without adding them to the loan balance, though interest continues to accrue. Ask specifically whether your lender offers it.

What happens if you miss a payment

A payment is typically considered late once it is 30 days past due. At that point, your lender reports it to the three major credit bureaus (Equifax, Experian, and TransUnion), and your credit score drops. The damage is immediate and significant—a 30-day late payment can lower your score by 100 points or more, depending on your current score and credit history.

At 60 days late, the lender may send a formal notice of default and begin collection calls. At 90 days late, repossession becomes legal in most states, though some lenders wait longer. Your lender does not need a court order to repossess; they can send a tow truck to your home, workplace, or anywhere the car is parked. Once repossessed, the car is sold at auction, and you receive a bill for the difference between the sale price and what you still owe (called a deficiency). You are also charged for towing, storage, and auction fees.

If you are already late, contact your lender immediately. Some lenders will still work with you even after a missed payment, especially if you can catch up quickly or enroll in a hardship program. The longer you wait, the less flexibility they have.

Voluntary surrender versus repossession

If you cannot afford the car and cannot get a hardship program to work, you have two paths: surrender the car yourself or let the lender repossess it. Both result in a damaged credit score and a potential deficiency bill, but voluntary surrender is slightly less damaging.

With voluntary surrender, you contact your lender, tell them you cannot keep the car, and arrange to return it. You avoid the cost and humiliation of repossession, and some lenders view it more favorably when deciding whether to pursue a deficiency judgment. However, you still owe the difference between the sale price and your loan balance, and the lender still reports the surrender to credit bureaus.

With repossession, the lender takes the car without your permission. The lender then sells it, often at a lower price than if you had surrendered it voluntarily, which means a larger deficiency. Repossession also costs more—towing, storage, and auction fees are added to what you owe. The credit damage is also steeper: a repossession stays on your credit report for seven years and signals to future lenders that you abandoned a secured debt.

If you choose voluntary surrender, do it in writing. Send a letter to your lender stating that you are surrendering the vehicle and include the vehicle identification number (VIN), current mileage, and location. Keep a copy for your records. This creates a paper trail that protects you if the lender later claims you abandoned the car or disputes the condition.

Selling the car to pay off the loan

If your car is worth more than you owe on it, selling it is often the cleanest exit. The difference between the sale price and your loan balance goes to you; you keep the car and avoid both hardship programs and repossession.

Use online tools like Kelley Blue Book, NADA Guides, or Edmunds to estimate your car's market value. Then get quotes from local dealers, online car-buying services (Carvana, Vroom, CarMax), or private buyers. Private sales usually yield more money, but dealer and online services are faster and handle the paperwork.

Once you have a buyer, contact your lender and ask for a payoff quote—the exact amount needed to close the loan on a specific date. The lender will provide a figure that includes interest accrued through that date. At closing, the buyer's funds go directly to the lender to pay off the loan, and any remainder goes to you. If the car is worth less than you owe (called being "underwater" on the loan), you will need to bring cash to closing to cover the shortfall.

State laws on repossession and deficiency

Repossession rules vary by state. Some states require lenders to notify you before repossessing; others do not. Some states allow lenders to repossess immediately after one missed payment; others require 60 or 90 days of default. Some states prohibit deficiency judgments (the bill for the difference after sale), while others allow them.

A few states—including California, Connecticut, and North Carolina—have strong protections against deficiency judgments or require lenders to sell the car at fair market value rather than auction. Others, like Texas and Florida, allow deficiency judgments with fewer restrictions. Your state's attorney general's office or a local legal aid organization can tell you what applies to you.

If your lender does pursue a deficiency judgment, they must sue you in court. You have the right to defend yourself, and you can argue that the lender did not sell the car for fair market value or did not follow state procedures. Many deficiency judgments are settled for less than the full amount if you negotiate.

Other ways to lower your car payment

If you want to keep the car but the payment is simply too high, refinancing is an option—but only if your credit is still good and you have equity in the car. Refinancing replaces your current loan with a new one, usually at a different interest rate and term. If interest rates have dropped since you took out your loan, refinancing can lower your payment. If your credit has worsened, refinancing will be expensive or unavailable.

Another option is to trade the car for a less expensive vehicle. If you have equity, that equity reduces what you owe on the new car. If you are underwater, trading does not help unless you can bring cash to cover the difference.

A third option is to add a co-signer or co-borrower to your loan, though this is rare and most lenders do not allow it on existing loans. Some credit unions offer this, but it requires the co-signer to may have access to on their own income and credit.

Frequently Asked Questions

How long do I have before my car gets repossessed?

Most lenders can repossess after 60 to 90 days of missed payments, but some states allow it after just one late payment. Your loan agreement specifies when repossession becomes legal. Contact your lender to ask the exact timeline for your loan and state. If you are already late, do not assume you have months—call immediately.

Will a hardship program hurt my credit?

A hardship program typically does not report to credit bureaus if you enroll before your payment is late. Once you are 30 days late, the damage is done regardless of whether you then enter a program. Enrolling in a program after a missed payment is still better than continuing to miss payments, but it does not erase the late report already filed.

What if I owe more than the car is worth?

You are underwater on the loan. If you surrender or the car is repossessed, you will owe the deficiency—the gap between the sale price and what you owe. Selling the car yourself may bring a higher price than auction, reducing the deficiency. Some states prohibit deficiency judgments; check your state's rules before deciding.

Can the lender come after me for the deficiency?

It depends on your state and your lender's policy. Some states prohibit deficiency judgments entirely. Others allow them but require the lender to sue you in court. If sued, you can defend yourself and argue the car was not sold for fair market value. Many deficiency judgments are settled for less than the full amount through negotiation.

Should I let the car be repossessed or surrender it myself?

Voluntary surrender is better. It avoids towing and storage fees, may result in a higher sale price, and looks slightly better to future lenders. However, both damage your credit and may result in a deficiency bill. If you cannot keep the car, surrender it in writing to create a paper trail.