Behind On Car Payments in Canada: Everything You Need to Know

It’s a situation that nobody wants to be in but many people are. Many through no fault of their own. If you’re facing missing or are falling behind on car loan payments, what’s going to happen?

 

Nothing to begin with but that’s no reason to not take action. Here's everything you need to know about falling behind on car payments.

 

Behind on a Single Car Payment

If you miss a single car loan payment, your lender will likely send a payment reminder via mail, email or text. Most lenders appreciate that life gets in the way sometimes and that people may miss a payment purely by accident.

 

That’s why the first reminder is a gentle one. To prompt your memory to hopefully make that payment.

 

The lender may or may not enter the missed payment on your credit report. Much depends on how quickly you pay and the lender in question. Others will report it, so expect your credit score to take a hit.

 

Behind on More Than 1 Car Payment

If you miss more than one car loan payment, the reminders become more insistent. Expect a letter, phone call, email and/or SMS reminder. You probably set up communication preferences when you first took out the loan so expect the lender to use any and all of them.

 

Further missed payments will definitely be noted on your payment history and your credit score will definitely take a hit.

 

Behind on Car Payments for 3 Months or Longer

What happens next depends on the lender. Some will sell the debt to a collection agency while others may take their own legal action.

 

If the debt is sold to a debt collection agency expect phone calls, letters and eventually, visits from debt collectors.

 

There are lots of legal protections from debt collectors in Canada so make sure you’re apprised of your rights.

 

If you still fail to make payment, the issue will very likely be sent to the courts. From there it’s in the hands of the lawyers!

 

How to Prevent Falling Behind on Car Payments

To be brutally honest, there is no real reason to ever miss a car loan payment.

 

Automatic payments can avoid ever forgetting to make the payment. That first reminder from the lender should be enough to prompt action and setting your own calendar entry should definitely prompt you into action.

 

If it’s about the availability of money, lenders have a series of tools available to help. If you work with them before you miss a payment you can usually work something out between you to keep up payments or at least avoid missing them!

 

Lenders are far more agreeable if you discuss your needs with them before you miss a payment. You’re just a regular customer trying to take control of a situation that might get out of hand. Lenders will usually be willing to come to an arrangement with you until you’re back on your feet.

 

You’ll never know unless you ask!

 

Thanks for reading.