What happens if I don't pay my car loan?

Before you decide to stop paying your car loan, due perhaps to your inability to afford your vehicle or lack of desire to hang on to it, understand the consequences.

Late Notices and Calls

If you stop making payments on your car loan, your finance company will begin to send you late notices and phone calls. If ignored, the frequency of phone calls made by your financier will increase, with you receiving calls at your home, job and at some point to your listed references until communication is established.

Payment Plan Option

Your finance company will attempt to work with you by establishing a payment plan to help you catch up on missed payments.

Final Notice

Once attempts to contact you and work out a repayment plan have been exhausted or become unfulfilled on your behalf, your finance company will send you a final notice regarding their intended action to recoup payment and late fees for your car loan.


If you ignore attempts to work out a solution, your finance company will initiate the process to retrieve your vehicle. After vehicle repossession, you will have the opportunity to pay off the balance of your car loan before the vehicle is sold. If your car is sold, you'll be responsible for the remaining balance plus any fees associated with storing your vehicle after it was repossessed.


You're not off the hook simply because your car was sold. If you avoid paying off the remaining balance of your car loan, finance companies will resort to seeking legal action by filing a judgement against you through the courts to recoup the remaining balance.

Wage Garnishment

If you fail to respond to the judgement or appear in court, you run the risk of having your wages garnished to pay off the loan balance. By law, your wages can be garnished up to 25 per cent of your disposable earnings.

Most recent