If you've missed a car payment, you've got good cause to start getting nervous. While laws on repossession vary from state to state, most can be harsh if you haven't made your car payments. If possible, you're better off getting ahead of the repo man by notifying the lender as soon as possible and trying to work out a payment plan.

Default

Double-check your car loan because it defines when you are in default. While some car loans define default as missing a single payment, others might define it as missing two payments. If the bank believes you are a flight risk, you might have as little as ten days after defaulting on your loan.

Next Steps

Many lenders are motivated to work out payment plans because they don't want to sell the car for its depreciated value. Having you pay the amount due without having to repossess the car is in everyone's best interest.

Final Steps Before Repossession

If you cannot pay the amount due and the car dealer is not amenable to negotiate, consider removing any valuables from the car and any improvements you have made, such as a bicycle rack or stereo system. While most lenders may not notify you before they repossess your car, many states require that the lender notify you before they sell it. This gives you one last chance to pay the balance due and other costs associated with repossession.