Bills Logo

Auto Loan Default

Mark Cappel
UpdatedDec 1, 2010

Does an auto loan default affect my credit rating?

Will defaulting on an auto title loan affect your credit rate? Tell me about auto loan default.

The quick answer is: yes. It will most likely hurt your credit to default on the auto title loan. Generally, missed payments on any loan or obligation that gets reported to the credit reporting agencies will negatively impact your credit rating.

If you are interested in how and why it will impact your credit score, read on...

First it is important to understand how your credit score is calculated. Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history.

Derogatory items remain on your credit report for up to 7 years. A bankruptcy may remain on your credit report for up to 10 years.

For more information, please visit the credit report resource and the credit score resource pages.


vvickie fedorcio, May, 2015

I am on ssd my spouse is on ss. we have 2 car loans. we want to surrender 1 of them because we can not afford 2 pymts anymore. if we do surrender 1 car can they take any money from our ssd,ss checks?

DDaniel Cohen, May, 2015

A debt that you owe for a deficiency balance on a car loan (the amount left after the car is sold and the proceeds from the sale are applied to the loan balance and any fees and penalties from the voluntary repossession) could lead to you being sued. 

If you are sued and judgment is obtained against you, the creditor would have different ways to try to collect from you, but your Social Security income would not be subject to garnishment from this type of creditor.