Yesterday we discussed what happens if you miss a payment. This brought up a lot of discussion in the office and prompted us to take the point a step further. So today we’re discussing what happens if you don’t pay your Burlington auto loan.
We’re not talking missing a payment and then taking immediate action here. More what happens if you just don’t make payments and don’t take any action.
It’s rare to see this but we do see it.
Missed a Burlington Car Loan Payment Once
As soon as you miss a single payment, your lender will send out a reminder. This will normally be a letter but may also be a phone call, or a letter with phone follow up.
As we find ourselves in all kinds of situations, lenders won’t usually take action until you miss more than one payment. Not all lenders are the same though so your experience may be different.
Missed a Burlington Car Loan Payment Twice
If you miss a second auto loan payment, you will likely be sent an arrears notice or formal notification that you’re behind in your payments.
Depending on the lender, they may wait 14 or 28 days and then send a default notice. This gives you notice to pay all auto loan arrears or face legal action.
If no payments are made, the lender may terminate your loan agreement and demand the whole loan amount and/or repossess the car. Repossession usually requires a court action but doesn’t always take long.
You can ask the court to work with you to give you time to repay the loan or you can allow the repossession to happen, it’s entirely up to you.
Depending on whether the car settles the outstanding loan or not, you may or may not be liable for the outstanding amount and perhaps legal fees. Much depends on your situation.
In hardship cases, not all lenders, or courts will levy even more debt onto you. They may just take the car to settle the loan and be done with it. But they may add those fees and make you liable for anything outstanding. There is no hard and fast rule here.
Missed payments and credit scores
If you do miss more than a single Burlington auto loan payment, you can expect your credit score to take a hit. The missed payment will also be recorded in your payment history for all future lenders to see.
There is no set amount your credit score will reduce by but it will likely be significant. That will be amplified if there is legal action or a repossession. These will also be recorded on your credit report for future lenders to see.
The situation isn’t terminal though. Once you’re free and clear of the loan, you can use a range of tools to rebuild your credit score, create a positive payment history and prove to future lenders that you’re a good bet.
It will take a while but it will happen!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!