What happens if you miss a car loan payment?

When buying a brand new car, you could either get it through paying in full cash or financing. In the case of the latter, opting for an all-in downpayment, low downpayment or any other financing option will require you to pay on a monthly basis. 

It is a convenient payment option if you can deliver the monthly amortization on time, the only downside to this is the interest rate from banks. Plus, there are also some consequences that’ll greet you if you miss a car loan payment.

Glitches such as defaults or failure to pay one’s loan repayments, repossession, and other problems occur when the car buyer cannot afford the repayments. Keep in mind that the guarantor will also be liable to shoulder these repayments in the event of failure on the borrower’s part, so you better find a quick solution for this in order to avoid any conflicts that involve your guarantor.

As expected, late fees are charged every time you fall behind on your car loan payment. A daily interest can also be charged by banks as the overdue amount accumulates, which is usually 5% of the monthly amortization. For example, if your monthly amortization is P10,000 then the late payment fee will be P500. So, if you are 2 months behind on payments you will be paying 5% of P20,000.

Banks don’t immediately repossess your car upon one late payment. There’s usually a maximum of 3 months grace period though it still depends on the actual contract you signed. The time allotted should give enough time for the owner to settle their outstanding balance before repossession takes place. So if ever you’re facing this situation, what is the one thing that you can do to save your car from being repossessed. 

Find someone to purchase your vehicle. This could be through a private listing on a car classified website, through a dealer, or auction. Before your unit gets repossessed, register now at AutoDeal.com.ph and post your vehicle for online selling. Our team shall help you find a private or trade buyer in order to help you solve the situation you’re in right now.

Your credit score or financial reputation will be stained if you have a car repossessed while under your name. This could pose a burden whenever you request a loan in the future. Talk to the bank. Banks understand that people go through difficult financial times so they are sometimes willing to adjust your monthly payments for a while until you can go back to paying normally again.

With all that said, make sure that you’re financially stable even before buying a new car. This should save you from the hassle of missing monthly amortizations and involving your guarantor in such situations as this. If you can pay in full cash, then that would be better, plus, it would also spare you from the hefty interest rate.