What Happens if I Make a Car Payment Past My Due Date?

by Linda Richard, Demand Media
    Make your car payments on time and enjoy your ride.

    Make your car payments on time and enjoy your ride.

    Lenders are going high-tech. Equipment on some cars requires a code for the car to function, “USA Today” reports. If your car has this equipment, when you make a car payment each month, you get the code that’s good until the next payment is due. A late payment gives you a few days with no code and no wheels that spin. Even if your car doesn't quit running when your payment is late, your credit rating can be damaged and the lender can repossess your vehicle.

    Contract

    You signed a contract with the lender that specified the amount of your car payments, the due date and the penalties if you fail to make payment on time. Review the contract carefully for the specifics. Your contract may allow you to be a few days late without penalty. Once that time known as a “grace period” is over, you’ll owe a late penalty with the payment. The contract may call for an increase in the interest rate once you have several late payments. This affects the amount of your future payments, so it's important to understand the contract details.

    Collateral

    The car is collateral or security for the loan. If you fail to make payments, you may be shocked to look out the window and see a tow truck attached to your transportation. The lender has the right to take possession of the car with no warning and leave you on foot. Read the contract to see how late your payments can be before this happens. If you’ve had a good payment record on the loan, a call to the lender explaining when you plan to pay may give you a reprieve from repossession of the vehicle.

    Vehicle Return

    You might get your vehicle back from the lender and the towing company if you catch up all payments and fees. It’s smarter to make the payment before the tow truck arrives and save penalties, towing fees, storage charges and whatever legitimate fees the towing company and lender can collect. If the due date for your payment is inconvenient, you may be able to get it changed so that it falls a few days after your payday. Refinancing, deferring payments or any other payment delays will add interest over the course of the loan.

    Credit Score

    If your car payment is more than 30 days overdue, the lender will report it as a late payment on your credit report. A single late payment report can lower your credit score by 100 points. Considering that the average credit score is 692, according to myFICO.com, that’s a significant drop. Contact the lender as soon as you know you’re going to be late with a payment. Make the payment as soon as you can and figure out how to make future payments on time.

    About the Author

    Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.

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