When you're struggling financially, trying to figure which creditors to pay can make you feel like you're walking a tightrope. One misstep could send you plummeting with all sorts of nasty possibilities awaiting you: foreclosure, lawsuits and repossession. There's no hard and fast rule on how long you can go without making a car payment; it depends on circumstances.
Leased vs. Purchased Vehicles
Whether you leased your car or took out a loan to purchase it, the rules for repossession are similar. Either way, repossession hinges on defaulting on the terms of the contract you signed. If you fall behind with payments, you're not performing according to the terms of the contract so the lessor or finance company has a right in most states to take your car. It's then sold so the lender can try to recoup some of its money. With a loan, you might end up owing the difference between whatever the vehicle sells for and your outstanding balance plus repossession costs. With a lease, you may find yourself responsible for the remaining lease payments and repossession costs, plus fees for excess mileage and wear and tear.
Most auto contracts give lenders the right to repossess as soon as consumers are in default, which technically means the day after a missed payment is due. A few states have laws that prevent repossession this soon because lenders must take additional steps, however, so check with legal aid or an attorney in your area to learn the rules there. In reality, it will probably take much longer than a single day for your lender to repossess your vehicle, but whether you can miss one payment, two or even three depends on your lender and when it decides to take action.
The Lender’s Decision
Many lenders make repossession decisions on a case-by-case basis. Your lender wants you to keep your car and it wants you to continue to make your payments. Repossession is usually a last resort to protect the lender's investment in your automobile. It might happen sooner if the lender feels it could lose its collateral if it doesn't take immediate action, such as if it considers you to be a flight risk who might take off with the car to parts unknown. If your credit was pretty good before you began experiencing financial problems, the lender may wait longer because there's a chance you'll set things right and catch up with your payments. If your credit was bad and you've defaulted on loans in the past, the lender may act more quickly.
What You Can Do
You don't have to stare at the calendar, waiting for the tow truck to arrive. Many lenders are willing to work with consumers to get their loans back on track. It can't hurt to call yours to find out if it can offer some solution rather than repossession. At least the lender will know that you're looking for a way to save the loan so it might not act to repossess quickly. Technically, making partial payments probably won't help — a portion of each payment is still delinquent so you'll continue to fall behind.
You might have more luck working out a solution if you leased your car. The company might agree to extend your lease for a longer term, reducing your payments or giving you a couple of months off from making payments while you get on your financial feet again. Just make sure you get the deal in writing so there's no misunderstanding regarding exactly what relief the company is offering and what happens if you still can't make the payments.