What Happens If You Miss a Car Finance Payment?
Missed a car finance payment? Find out what really happens — from late fees and credit score impacts to vehicle repossession — and how carloans 365 can help you take control before things escalate.
Life can throw unexpected challenges your way — and sometimes that might mean missing a car finance payment. While it’s not ideal, it’s important to understand what happens next and what steps you can take to minimise the impact.
At carloans 365, we believe in being upfront and supportive. Here’s what you need to know if you ever find yourself in this situation.
1. You’ll Likely Incur a Late Payment Fee
Most lenders will charge a late payment fee if you miss a repayment date. The exact amount depends on your agreement, but it’s a standard clause in most car finance contracts. Missing payments can make your next bill more expensive, as you’ll have to cover both the original payment and the late fee.
2. It Will Be Reported to Credit Reference Agencies
If your payment is more than 30 days overdue, your lender will typically report the missed payment to credit reference agencies. This can negatively impact your credit score, making it harder to get approved for loans, mortgages, or even mobile contracts in the future.
Timely payments are one of the biggest factors affecting your credit score, so even a single missed instalment can have lasting consequences.
3. You May Receive a Notice of Default
If you continue to miss payments, your lender may issue a Notice of Default. This is a formal warning that gives you a final opportunity to catch up before further action is taken. Ignoring this notice can lead to your account being passed to a debt collection agency.
4. Your Vehicle Could Be Repossessed
With certain types of car finance, such as Hire Purchase (HP) or Personal Contract Purchase (PCP), the car remains the property of the finance company until the agreement is settled. This means if you fall too far behind on payments, the lender has the legal right to repossess the vehicle — especially if you’ve paid less than one-third of the total amount due.
5. You’ll Owe the Remaining Balance
Even if the car is repossessed, you’re still responsible for repaying any outstanding debt. If the car is sold at auction and the sale doesn’t cover what you owe, you’ll need to pay the shortfall. Plus, additional fees for recovery and administration may apply.
What You Should Do If You Miss a Payment
Missing a payment doesn’t mean everything is lost — but acting quickly is key. Here’s what you should do:
Contact Your Lender Immediately
Most lenders appreciate open communication. If you’re upfront, they may offer a payment holiday, reduced payments, or a temporary freeze on interest.
Check Your Budget
Look at your monthly income and expenses to see if you can reallocate funds or reduce spending elsewhere to get back on track.
Seek Independent Financial Advice
If you're feeling overwhelmed, organisations like StepChange or Citizens Advice can help you explore your options and create a repayment plan.
Prevention Is Better Than Cure
At carloans 365, we encourage customers to set up direct debits and review their budgets regularly to stay ahead of repayments. If you ever feel your financial situation changing, speak up early — the sooner you act, the more flexible your options will be.
