If I Can't Pay My Car Loan Because I Lost My Job, Will it Be Repossessed?


Losing your job can create a multitude of financial problems. With loss of income, paying your bills such as automobile loans can prove challenging. Defaulting on auto loans increases your risk of losing your car. Repossession refers to an auto lender taking back the car for non-payment of the monthly note. But fortunately, certain strategies can help you avert a repossession after losing your job.

Consequences of a Repossession

Car repossessions do damage credit scores; thus, it's imperative to keep a repossession off your personal credit file. With this type of negative remark on your permanent file, future auto lenders may deny your application for financing. And if they accept your application, you are more likely to pay a higher auto loan rate, which inflates the monthly payment on the car. Higher interest rates can also affect other types of financing from mortgage loans to credit cards. A repossession stays on credit reports for seven years.

Deferred Payments

With knowledge of your employment situation, your auto lender may defer a repossession and postpone payments on your account for a few months. By allowing you to skip payments, you're able to secure new employment and get your payments back on track to avoid a repossession in the future. To receive this type of help, notify your auto lender of your situation immediately and submit the necessary documentations (unemployment verification, bank statements, income statements) to qualify for deferred payments.

Negotiate Partial Payments

Another method to avoid repossession after losing a job is to negotiate partial payments with your auto lender. Discuss your finances with your auto lender and tell the lender what you can afford to pay each month. Agree to make partial payments each month, and agree to resume your normal payment amount once you find new employment. You can either add money to your payments to compensate for making partial payments or ask your lender to lengthen your loan term.


If your auto lender is ready to repossess your vehicle, but you get a new job before the lender acts, you can stop a repossession by paying the delinquent debt plus interest and fees. Call up your lender and inform it of your employment status. Mention your plans to pay off the delinquency and keep your automobile. This action may move your lender to defer repossessing the car and allow you time to pay the balance owed.

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