When Does a Late Car Payment Get Reported in Canada?

Today we’re talking about missed or late car loan payments. More specifically, the time and circumstances around missed payments and when they appear on your credit report.

 

Missing payments isn’t a situation anyone wants to be in but it can happen. With the best will in the world, life is busier than ever and things get missed.

 

So, if you miss a car loan payment, what happens?

 

Late Car Loan Payments and Payment History

Your payment history is one of the most important areas of your credit report and makes up around 30-35% of your credit score. That’s why we’re so hot on advising everyone to never miss a payment.

 

 

But, if you do, what happens?

 

Missed a Payment by a Day

If you forgot, were busy or just couldn’t get to the bank or computer, missing a car loan payment by 24 hours isn’t a showstopper.

 

Lenders use billing cycles to report to your credit report. Those cycles are between 28-30 days so if you can make the payment before the next billing cycle, it is possible the late payment won’t be reported.

 

Most lenders work like this but not all will. If you have a habit of missing payments or this is part of a routine, they may decide to ‘help’ you change it by reporting or threatening to report the missed payments to the credit bureaus.

 

They will usually warn you before they do though.

 

Missed a Payment Past a Billing Cycle

If you don’t make the payment within that 28-30-day billing cycle, it will very likely be reported to the credit bureaus as a missed payment. That missed payment will be visible on your credit report for up to 6 years in Ontario so it’s a big deal!

 

That said, many lenders won’t pay too much attention to a single missed payment as life happens. Miss more than one or make a habit of missing payments and that attitude will change.

 

Your credit score will take a hit if you miss an entire billing cycle. How much depends on your current score and your payment history.

 

If you have never missed a payment and have a long history of paying on time, your credit score will be dinged but not by much.

 

If you have a spottier payment history then your score may receive much more of a hit.

 

There is no set amount that your credit score will be reduced by as so many factors are taken into account.

 

Missed Payments and Car Loans

If you’re applying for a car loan and have a single missed payment, most lenders will just ignore it. Especially if it’s a single blip on a long payment history.

 

Miss more than a single payment and questions will be asked. Some lenders may refuse a car loan or impose conditions such as a higher interest rate.

 

For these reasons and more, we always recommend setting up automatic payments. As long as you keep the money in your account, you should never miss a payment!

 

Thanks for reading!