Depending on the reason why your loan isn't paid off by the end of the loan term or how many days have passed since your last payment, you might not suffer any repercussions or your lender might repossess your vehicle. Various situations can affect your loan payoff, such as late payments or a loan deferment or modification, which amends your original contract.
Your Original Contract
If your car loan isn't paid off by the end of the loan term, you might have to pay late fees. If you're only late by one payment, make your payment within the lender's grace period. Review your loan contract to determine the cost of your late fee. To completely satisfy your loan, you must satisfy your entire loan balance, even if it means paying extra fees or more in interest because of late payments. If your payment is more than 30 days late, review your contract to determine when the lender can repossess your vehicle.
Payment Deferment or Changing Your Payment Due Date
If you have trouble making your car payment during the loan term, you can ask your lender to defer your car payments. Deferring a car payment allows you to skip one more loan payment, which is added on to the end of your loan. Payment deferments don't cause a repossession, but you'll increase the amount you pay in interest. Once your lender agrees to defer your payment, you won't pay late fees and the lender won't report the late payment to the credit bureaus. You can also ask your lender to change your due date. Obtain any agreements from your lender in writing.
Loan Modification
Your lender might offer to modify your loan if you can't make payments because of financial hardship. Acceptable proof of financial hardship may differ by lender, but often include disability, unemployment or a loss, whether it is your home or spouse. A loan modification allows your lender to adjust the terms of your loan, usually by extending the loan term to decrease your monthly payment. A loan modification changes the terms of your original contract, but you'll sign a new contract with your lender. You'll likely also pay a higher interest rate.
Repossession
If you don't make your car payment and don't discuss your options with your lender, it might repossess your vehicle. If you didn't sign any paperwork to modify your payment agreement and you're outside of your payment grace period, your lender can seize your vehicle and resell it. You'll have an opportunity to purchase the vehicle back from the lender by paying your past due amount, late fees and repossession costs. Otherwise, the lender will sell the vehicle and you'll either have to pay the difference in sales price and loan balance or the lender will return any profit to you after paying off your loan balance.
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