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How late can you be on your car payment? What to do if you can't pay your bills


As more and more people experience financial uncertainty as a result of the coronavirus pandemic, banks and other lenders offer programs to postpone car payments.

Angela Lang / CNET

If you've already missed a payment or two on your auto loan because of coronavirus – or you think you might miss a car payment soon – you're not alone. A reported 7.5% of car loans are currently in patience, according to the Wall Street Journal. That means millions of drivers across the country.

Usually a car payment can damage your credit rating or even cause the bank to withdraw your vehicle. In an attempt to help clients weather the current financial situation most lenders seem to be sympathetic, but make sure: The worst thing you can do is ignore the problem and assume it will work itself. (Scroll to the end for what you absolutely should not .)

In addition to financial resources such as the first round of stimulus checks that are still being sent, as well as a possible second round of checks that is currently being discussed, most auto loan lenders have implemented financial difficulty programs to help borrowers who have difficulty paying due to the pandemic. But just like the available assistance with rental payments and unemployment benefits you need to know where and how to register.

Here is a look at the latest information and resources we could find to help you manage your car payment. We will continue to update this story as new details emerge.

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How does coronavirus affect late car payments?

Usually, most lenders will report a delayed payment to the credit bureaus when it is at least 30 days late, and they will usually remove your vehicle after you miss three or more consecutive payments.

Now the situation has changed. In response to the pandemic, some states have proposed legislation to restrict or postpone vehicle repurchases, although other areas do not have such measures on the table. In New York, for example, the State Assembly is debating a bill that would stop all car loan payments for 90 days. In April California ordered auto insurance companies to reimburse two months premium value for customers.

The self-industry has not agreed on reporter companies, many of whom are now dismissing dozens of employees, even allowed to work in areas under strict on-site protection arrangements . The Association of Credit and Collection Professionals, a lobbying group for debt residents, has argued that debt collection is an essential service, but legislators have not yet managed. As more American cities begin to open again and orders for closed non-essential companies are gradually lifted it is only a matter of time before debt collection companies return to business as usual.

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However, these measures represent, at best, an implementation standard. Eventually you have to face the problem. If you are worried that you will not earn on your car loan, the best protection against losing your car or truck may actually come from your lender yourself.

Chances are that your lender is willing to help

In response to the widespread financial turmoil caused by the coronavirus pandemic, many lenders have expanded and streamlined their financial difficulties with deferral programs. These programs usually allow you to skip your car payment for one to three months so you can get your money situation in order. When the suspension period ends, either your monthly payment will either increase slightly or your loan will be extended by the same period of time as the suspension.

On the downside, interest continues to accumulate during the months you skip the payment, so that you end up paying more for your vehicle. But on the plus side, your missed payments will not appear as negative marks in your credit report .

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Hyundai is one of the many car manufacturers offering postponements of current loans and new car purchases.

Juan Garzon / CNET

Consumer credit monitoring company CreditKarma has a list of banks with information on their difficulty programs, and car buying guide Edmunds keeps track of what relief car manufacturers offer for those with loans through the manufacturer.

CNET sister site Roadshow details relief program for existing loans as well as incentive program for new cars with a number of car manufacturers. If you don't see your lender on any of these lists, you can try contacting the company directly through their website or app.

How to talk to your bank about options

If you have no idea where to start, the legal services website DoNotPay has a chatbot that can help you prepare a letter to your lender . However, with so many people losing income due to the pandemic, most banks have made it easier than usual to apply for a loan, so you can probably manage it on your own.

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You may or may not be asked to provide documentation that you have experienced a loss of income due to coronavirus, so if you have a cancellation letter or notice of termination, be ready to send your bank a copy of these documents.

Otherwise, just being honest and forthcoming about your situation and being realistic about how much time you need to get back on your feet. In general, the banks would rather work with you and keep you as a customer than leave you stranded without a vehicle.

What happens when you miss a car payment

In most states, a lender, like your bank, can start the repayment process the day after you miss only one payment, but most companies give their customers a deductible period. Often, the lender does not even charge a fee until the payment is at least ten days late, and most will not report to the three major credit bureaus until it is over 30 days late.

If you've been a criminal for 30 days – and especially if you miss the next two payments in your loan cycle, too – this is where you start treading into repossession, or repossession, territory.

Most scratches occur after two or three months without payment

If you have fallen behind (or you think you will fall behind) on your car payment for 90 days or longer, you may well be at risk of getting back your car. Your lender may be easier if you have never missed a payment, but the more often you have been late in the past, the sooner they can try to withdraw.

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Ford is currently offering to pay six months of new vehicle payments when purchasing a new car from the company.

Wayne Cunningham / CNET

How reuse works

In most cases, your lender will meet with a third-party agency that specializes in readmission. That company will use all the information it can get – such as your home and work addresses – to track the vehicle and tow it to a safe, usually gated lot. It does not need your car keys to take your car.

The repo company then charges your bank for towing the vehicle as well as a daily storage fee. Unless you have left your keys in the car, the reporter will also contract a locksmith to create a new set of keys – then charge your bank for that service as well. Having said that, you owe anywhere from a few hundred to over a thousand dollars in fees, which the bank will then expect to pay regardless of whether you get your car out of repo or not.

Your rights versus the bank's rights

In almost every case, your bank does not need a court decision to try to take back your car. You can see a list of all states' specific laws on the reuse of cars here, but in general, your lending institution (or any company that engages in it) has the right to come to your property and take the car as long as no one commits a "violation of peace." (Wait for it …).

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Andrew Hoyle / CNET

This means that its representatives cannot break into a locked garage, through a locked gate or otherwise use physical force against you or your property to take possession of your vehicle. However, they can follow you to work – or the grocery store – and wait until you leave your car alone.

How do you get your car out of the repo – and what happens if you don't

But what if it's too late and your car already has a repo? Many states have laws on the books about how long and under what conditions lenders must allow you the chance to get your vehicle back from repossession, but the terms are not exactly favorable if you are in the type of financial situation that led to the repo first.

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Generally, the law only forces lenders to drop your car back to you if you pay off the loan as well as any towing and storage fees that have occurred. In practice, however, most lenders are willing to give you your car back if you can at least remember your late payments (and of course with the repayment bill as well).

If you leave your vehicle in repairs, either because you can't afford to take it out or you just decide it's not worth it, you're still not completely gone. The bank is likely to auction off your car to the highest bidder and then apply the proceeds from that sale to your remaining balance, including repayment fees. If it does not cover all your debt, the bank can continue to pursue you the balance, including handing over your account to a debt collection agency and reporting criminal records to the credit bureaus.

You also have a few wild card options

If you risk having your car or truck reassembled, there are other options besides suspension, but none as simple or simple. You can do what is called a "voluntary reuse", where you contact your lender and state your desire to turn your vehicle over to it. Your credit will be affected and you will be held liable for all outstanding debts that the bank does not recover from the auction, but the total impact on both your credit score and pocketbook will be less than if you wait for the bank to force your car.

You can refinance your car for a longer loan period with a lower monthly payment, but it only works if you have already paid out a substantial amount of capital. If you've only had your car loan for a year or two, you may still owe more than it's worth. In addition, your credit must be good enough for a bank to take out a new loan for you, which may or may not be the case.

You can also try to sell your car in the open market, or exchange it for something cheaper, but again, with the economy experiencing the sharpest economic downturn it has seen in over a decade neither of These options are very convincing.

What you absolutely should not do

Whatever you do, do not try to hide your car from your bank or the repo company. First, you probably won't beat them in their own game, and the longer it takes (and the harder you do), the more they'll charge you for their services in the end.

And don't just stop paying your loan and hope for the best. Whether legislators decide that the repo industry performs an "essential" function, or if the repo has to wait for a treatment or vaccine like the rest of us before returning to work, your crime will eventually remember you. With banks showing some compassion right now for those who have suffered financial difficulties, you might as well take advantage of one of their relief programs while you can.

If you are worried about being able to pay your car payment and you have not received your stimulus check yet, how to track your stimulus payment to see when you can expect the money. Once you receive your check, these tips can show you how to spend your stimulus money wisely . If you are worried about housing, here is what to do if you cannot pay your rent as well as all you need to know about mortgages during the pandemic.

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