Overview
If you fall behind on payments and your loan is secured by your vehicle, your vehicle could be at risk of repossession. However, repossession is typically a last resort, and there are steps you can take to avoid losing your car if you're struggling with payments.
This guide explains how repossession works, what leads to it, and how you can protect your vehicle and credit.
What Leads to Vehicle Repossession?
When you take out an auto secured loan, your vehicle serves as collateral for the loan. If you fail to make payments, your lender has the legal right to repossess your vehicle in accordance with the terms of your promissory note or retail installment contract, as well as applicable laws.
- Missed Payments – If payments are not received by the due date, your account becomes past due the following day. Continued nonpayment may result in default as outlined in your loan agreement.
- Loan Default – The longer your payment remains unpaid, the greater the risk of default. Missing multiple payments may lead to late fees, negative credit reporting, and ultimately repossession in accordance with your loan agreement and applicable laws.
- Failure to Communicate – If you're experiencing difficulty making payments and do not contact your lender, you may miss opportunities to explore available loan assistance options.
💡 Important: Repossession can damage your credit, make it harder to qualify for loans in the future, and may still leave you with a balance to repay after the vehicle is sold.
What Happens If My Car Is Repossessed?
- Repossession Costs – You may be required to pay the repossession fees, which can be added to your balance.
- Vehicle Sale – Your lender may sell the vehicle to recover the remaining loan balance.
- Deficiency Balance – If the sale of the vehicle does not cover the total amount you owe, you may be responsible for paying the remaining balance (deficiency balance).
- Credit Impact – A repossession will appear on your credit report, making it harder to get approved for loans in the future.
How to Avoid Repossession
If you're struggling to make payments, taking action early is key to protecting your vehicle and financial health.
- Communicate Early – If you anticipate missing a payment, contact your lender before your due date to review potential options.
- Explore Loan Assistance Options – Temporary payment adjustments or structured assistance plans may be available.
- Set Up AutoPay – Automatic payments reduce the risk of missed payments
- Make Partial Payments If Eligible – Ask whether partial payments may help reduce past-due balance.
💡 Tip: Acting before your due date gives you more flexibility and can help protect your vehicle and credit.
Next Steps
If you're concerned about making payments on your auto secured loan, log into your Upstart account loan dashboard to review your payment options or contact your lender for assistance.
