How many months are overdue on car payments before the car is repossessed?

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How many months are overdue on car payments before the car is repossessed? 

Many people frequently ask, 'How many months of missed car payments will lead to car repossession?' This is because recent economic and domestic situations may have affected financial stability, making it difficult to allocate funds for car payments in certain months. As a result, some individuals may have had to postpone their car payments. However, this raises concerns about when our cars might be repossessed.

Indeed, it's true that you can delay car payments, but it may not yield favourable results. This is because you may incur additional interest or have to pay extra fines and fees when making late payments. Importantly, you could negatively impact your credit with financial institutions, making it more challenging to obtain loans or conduct other financial transactions in the future. 

How many months of missed payments before a car is repossessed?

If you have consecutive missed car payments for 3 months or 90 days or more, there is a high likelihood of car repossession. However, before reaching that point, there are several other processes that typically occur:

  1. Debt collection calls and follow-up.
  2. Sending debt collection letters or notices to your home.
  3. Debt collection efforts initiated by a law firm if the matter is escalated.
  4. Legal action, which may involve court proceedings and potentially leading to a court judgement. 

But don't panic just yet. Initially, when you have consecutive missed car payments for 3 months, the finance company will take an additional 30 days for debt collection efforts. Therefore, you will have approximately 4 months to clear the debt or negotiate with the finance company. However, if this period passes without payment, car repossession is almost certain.

*It depends on the terms and conditions of each company 

If you experience car payment delinquency, you have two options: allow the car to be repossessed or find a way to settle the outstanding balance. However, it's important to note that letting your car be repossessed does not mean your debt is resolved. When the finance company repossess your car, they may sell it in the market, which will inevitably result in a lower sale price than market value and likely less than the amount you owe. 

Therefore, if the finance company manages to sell the car, they may come back to you to collect the difference. 

So, before deciding to take out a car loan or miss car payments, it's essential to carefully consider your options. Making an ill-informed decision or not having a comprehensive plan in place can lead to continuous negative consequences.

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