Quick Answer: What Happens When You Stop Paying Your Car Payment??

If you continue to miss payments, and do not reach an agreement with your lender, the car will likely be repossessed.

If reported, the late payments and repossession can damage your credit score and make it harder to get credit in the future.

Some states allow cars to be repossessed after one missed payment.

Can you go to jail for not paying a car loan?

However, some states—roughly a third—still use jail as a method to coerce debtors to pay certain debts. Today, you cannot go to prison for failing to pay for a “civil debt” like a credit card, loan, or hospital bill. You can, however, be forced to go to jail if you don’t pay your taxes or child support.

Can you give your car back to the finance company?

When you return your car to your lender or dealership, it’s called voluntary repossession. You take your vehicle back to your lender or dealership before it’s taken from you. Your credit will still take a hit, but it might be slightly smaller than with involuntary repossession — and can save you fees.

How long does a default affect your credit?

How long does a default stay on your credit file? A default will stay on your credit file for six years from the date of default, regardless of whether you pay off the debt. But the good news is that once your default is removed, the lender won’t be able to re-register it, even if you still owe them money.

Photo in the article by “EDSITEment – National Endowment for the Humanities” https://edsitement.neh.gov/event/margaret-fuller-american-transcendentalist-and-womens-rights-advocate-born