When you fall behind on a car payment, your lender usually won't take action when ready — but the window to fix it is narrow
If you miss an auto payment, you typically have a grace period of 10 to 15 days before the lender reports it to credit bureaus. During this time, you can catch up without damage to your credit score. After that, the missed payment stays on your report for seven years, and your lender can begin repossession proceedings. The sooner you contact your lender after missing a payment — or before you miss one — the more options you have.
Most lenders have programs designed for borrowers in temporary hardship. These are not the same as loan forgiveness; they are structured ways to pause, reduce, or reorganize your payments so you can keep the car and stay current. The specific programs vary by lender, but the process of finding them is the same: call your lender's customer service number, explain your situation honestly, and ask what options exist for your account.
Key Takeaways
- Contact your lender before you miss a payment if possible, or within days of missing one, because grace periods are short and options shrink quickly.
- Most lenders offer forbearance (temporarily lower or skipped payments), loan modification (restructuring the loan), or refinancing as hardship options.
- You will need to document your hardship — job loss, medical emergency, or reduced income — with recent pay stubs, bank statements, or a letter from your employer.
- Forbearance and modification do not erase missed payments but can prevent repossession and stop credit damage from getting worse.
- If your lender denies help, you can explore selling the car, refinancing with a different lender, or consulting a credit counselor.
Forbearance: temporarily pausing or reducing payments
Forbearance is the most common option lenders offer. It means your lender agrees to let you skip one or more payments, make smaller payments for a set period, or delay payments without penalty. The missed or reduced payments are not forgiven — they are added to the end of your loan, extending the payoff date and the total interest you pay.
Forbearance periods typically last 3 to 6 months, though some lenders allow longer. During forbearance, your account is not reported as delinquent to credit bureaus, so your credit score is protected. After the forbearance period ends, you resume regular payments plus whatever arrangement you made for the skipped or reduced amount.
To request forbearance, call the customer service number on your loan statement or bill. Have your account number ready and be prepared to explain why you need help — a job loss, medical bill, or temporary income reduction. The lender will likely ask for documentation: recent pay stubs, a termination letter from your employer, or bank statements showing the hardship.
Loan modification: restructuring the terms of your loan
A loan modification changes the structure of your loan itself. Your lender might extend the loan term (spreading payments over more months), lower the interest rate, or both. This reduces your monthly payment permanently, not temporarily. Unlike forbearance, modification is meant for borrowers whose income has changed and who cannot afford the original payment going forward.
Modification is harder to obtain than forbearance because it costs the lender money in lost interest. You will need to show that your hardship is long-term — a permanent job change, disability, or reduced hours — not a temporary crisis. Documentation is more thorough: the lender may ask for recent tax returns, pay stubs from the past two months, and a written explanation of your situation.
The approval process takes longer than forbearance, often 4 to 8 weeks. During this time, continue making your regular payments if you can, or ask the lender whether you should make reduced payments while your request is under review. Ask in writing what the lender needs from you and by what date, so you have a clear timeline.
Refinancing with a different lender
If your current lender will not work with you, or if you have improved your credit score since you took out the original loan, you can refinance with a different lender. Refinancing means taking out a new loan to pay off the old one. The new lender pays your current lender in full, and you owe the new lender instead.
Refinancing can lower your monthly payment by extending the loan term or securing a lower interest rate. It can also give you a fresh start if your current lender has been uncooperative. However, refinancing comes with costs: process fees, appraisal fees, and title transfer fees typically range from $200 to $500. You also restart the clock on your loan, meaning you pay interest for longer.
Banks, credit unions, and online lenders all offer auto refinancing. Credit unions often have lower rates and more flexible terms for members in hardship. Before you refinance, check your credit score and shop with at least three lenders to compare rates and terms. If your score has dropped due to missed payments, refinancing may be difficult or expensive until you catch up on your current loan.
What happens if you cannot catch up
If forbearance, modification, and refinancing are all unavailable or unaffordable, you have two paths: surrender the car or explore selling it yourself. Surrendering means returning the car to the lender, who will sell it at auction. You remain responsible for any difference between what the car sells for and what you owe — this is called a deficiency. A deficiency judgment can appear on your credit report and lead to wage garnishment.
Selling the car yourself is often better. If you owe $8,000 and the car is worth $10,000, you can sell it privately, pay off the loan, and keep the $2,000. Even if you owe more than the car is worth, selling it stops the debt from growing and may be cheaper than a deficiency judgment. List the car on Craigslist, Facebook Marketplace, or Autotrader. Be honest about its condition and any mechanical issues.
If you sell the car for less than you owe, you can negotiate a payment plan with the lender for the remaining balance. Many lenders will work with you on this because it is cheaper for them than repossession and auction.
Working with a credit counselor
A nonprofit credit counselor can help you understand your options and communicate with your lender. Credit counselors are certified by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association (FCA). They offer free or low-cost consultations and can review your budget to see whether forbearance, modification, or another path makes sense for your situation.
Credit counselors do not negotiate with lenders on your behalf — you still make the calls — but they can coach you on what to say and what documents to gather. They can also help you understand whether a debt management plan (a structured repayment agreement) might work for multiple debts, not just your car loan.
To find a counselor, visit the NFCC website (nfcc.org) or call 1-800-388-2227. The service is free, and counselors are bound by confidentiality. Avoid for-profit credit repair companies; they cannot do anything a credit counselor cannot do, and they often charge hundreds of dollars.
How to avoid this situation next time
Once you have stabilized your car payment, build a small emergency fund — even $500 to $1,000 — so a single missed paycheck does not become a missed payment. Set up automatic payments from your checking account so you cannot forget. If your income is irregular or seasonal, budget based on your lowest month and treat higher-income months as extra.
If you know a hardship is coming — a job change, medical procedure, or major expense — contact your lender before you miss a payment. Lenders are far more willing to help someone who calls ahead than someone who calls after missing two payments. Keep your lender's customer service number in your phone and your account number in a safe place.
Frequently Asked Questions
How long do I have before my car gets repossessed?
Most states allow repossession after one missed payment, but lenders typically wait 60 to 90 days to give you time to catch up. Some lenders are more patient; others move faster. Call your lender when ready if you miss a payment — do not wait to see what happens.
Will forbearance hurt my credit score?
Forbearance itself does not hurt your credit if you have not yet missed a payment. If you have already missed one, forbearance stops further damage but does not erase the missed payment from your report. The missed payment stays for seven years but becomes less damaging over time.
Can I get my loan modified if I am already behind?
Yes. Being behind actually strengthens your case for modification because it shows the current payment is unaffordable. However, you must contact the lender quickly — the longer you are behind, the fewer options they will offer.
What if I owe more than the car is worth?
You are underwater on the loan. Refinancing is difficult because the new lender would be lending more than the car's value. Forbearance or modification may be your best option. If you must surrender or sell, you will owe the difference, but a payment plan with the lender is usually possible.
Do I have to use my lender's hardship program, or can I work with a third party?
You must work with your lender — they own the loan and make the final decision. Credit counselors and nonprofit organizations can guide you, but only your lender can modify your loan or grant forbearance. Be cautious of any company that claims to negotiate with your lender for a fee.