It happens to the best of us. Funds get tight, paychecks are late, bills pile up, and before you know it you are late making your utility payments, your rent payment, and your car loan payment. It doesn’t seem like too big a deal until the phone starts ringing and the bank starts threatening to come and repossess your vehicle unless you make a payment. Fortunately, it doesn’t usually have to come to that, and drastic action by creditors can usually be avoided. So what happens first when you are late with your car payment, and what can you expect in the days following?
First, you should make a phone call to your car loan holder and tell them what is going on. Explain your circumstances and the facts that you know your payment is late, and give them a time frame in which you expect to be able to make the payment that is due. Very often, communication with your lender is the key to maintaining a good relationship while you handle the financial aspects involved. If they see that you are conscientiously working to bring your payment current and handle the situation honestly, they are more likely to be gracious and give you time to handle the matter.
Next, you should know that even though your lender agrees to give you time to bring your payment current, you will likely be charged a fee for your tardiness. Be aware that the fee should be added on to the payment you owe when you send it in, because if you do not then it will simply be one more outstanding amount due. There is usually no way around these types of fees, though you may be able to negotiate a lowered fee if you have never been late with a payment in the past.
Now, your lender is also assessing their view of the situation. They are deciding just how much time they will give you before contacting you again, and also just how aggressive they are going to be to collect the amount due. Lenders would much rather have you get caught up on your payments than go to the last resort of repossessing your vehicle, because in the end they do not want your vehicle, they want your money. Realizing this will help you to deal effectively with your lender and keep things in perspective.
Most lenders will not begin repossession action until you have missed two, possibly three payments. You will receive a warning letter, and then one day your vehicle will just not be where you left it. Repossession professionals are quick and quiet, and they do not negotiate. Ideally, you will be able to catch up your late payment and repossession will never occur. Stay in communication with your lender, be polite, and do your best to make that late payment.