Car loans

If you've missed a repayment on your car loan, it can be very stressful, especially if you're dependent on your car.

Get back on track with these steps.

Steps to take if you're struggling with your car loan


Find out if your car is security for your loan

The first thing to do is find out whether your car is security for your loan. Check your loan contract or the national register (called the Personal Properties Securities Register).

If your car is security for your loan
Your car may be seized. If it's a personal loan, a default notice must be sent giving you at least 30 days to pay your arrears before your car can be seized.

If your car is not security for the loan
Your lender can't seize it unless they have a court order authorising the Sheriff to take it. This process can happen very quickly.


Work out how much you still owe

If you're not sure how much you owe, ask your lender. The lender can't seize your car without a court order if you have paid more than 75% of the loan.


Ask to speak to your lender’s financial hardship department

Contact your lender as soon as you can and speak with their financial hardship department.

Tell the lender you're in financial hardship and negotiate a payment arrangement that you can afford. The lender has to reasonably consider your request. Read more about how to negotiate payment terms.

If they agree to an arrangement, ask for it to be confirmed in writing and stick to the arrangement.

If they don't agree, you can apply to External Dispute Resolution.


Sell your car

Another option is to sell your car. This option might be appropriate if:

  • you can no longer make any payments
  • you don’t need your car for work
  • you can use a less expensive form of travel, such as using a cheaper car, public transport or a bicycle.

It’s important to note that when you sell your car, you have certain obligations. You must:

  • tell the person buying the car that it's under finance; and
  • get your lender's permission to sell the car.

When a sale price is negotiated, tell your lender. If they're happy with the arrangement, ask how they'd like the payment to be made to them. If the sale price is below what you owe the lender, you will still have to pay the remainder of the loan.


Give your car back to the lender to sell

You can give your car back to the lender voluntarily. If you do this, take photos of the car so you have proof of the condition it was in. You should also research the value of the car.

Your lender will then sell the car. If the sale price is under what you owe, you'll have to pay the remainder of the loan.

Tips IconTip

Look in local trading newspapers or check online to see what cars of a similar age and condition are selling for.


Speak to one of our financial counsellors

If your problem still hasn't been solved, or you're feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.

BMW Finance Compensation Scheme

If your car loan is with BMW Finance, check whether you are eligible to receive compensation and how to apply by reading the BMW Finance Compensation news item.

Car repossession

Can my car be repossessed?

Yes, cars bought on credit can be repossessed under certain circumstances:

  • if you ‘defaulted’ on the loan agreement. For example, you failed to make repayments or failed to keep the car insured
  • if you've been given a notice by the lender (required in most cases) stating that you're in default of the loan, have had 30 days to fix the problem and you didn't do so within that time. 

Can my car be taken without my consent?

If your lender threatens to repossess your car and/or your default notice has expired, lodge a complaint with an External Dispute Resolution scheme immediately. The lender can't take your car while a dispute is being considered.

Your lender or repossession agent can't repossess your car from private residential property without your written consent or a court order. You can refuse to sign the consent form and seek legal advice.

However, they can repossess your car without consent if it's parked outside your property or your place of work.

If you find yourself in this situation contact us on 1800 007 007 and speak with one of our financial counsellors immediately.

What can I do after my car has been taken?

The lender must serve you a written notice within 14 days of the car's repossession stating:

  • the date the car was taken
  • the estimated value of the car
  • the enforcement expenses incurred to date and any other enforcement expenses accruing, such as the daily storage rate for the car
  • a statement of your rights.

The lender can't sell the car until 21 days after the date of the notice.

If you pay the arrears, the enforcement expenses and your normal repayment (if it is due during the notice period) the lender must return the car to you.

If the enforcement expenses claimed seem too high, check your contract and get advice from one of our financial counsellors on 1800 007 007.

If you can get back on track, but can't pay the amounts required within the 21 days, you can apply for a hardship variation.

What happens when the lender sells my car?

If full payment isn't made within 21 days, the lender must sell the car as soon as possible for the best price that is reasonably obtainable.

Once the car is sold, the lender must send you a notice stating:

  • the amount the car sold for
  • the net proceeds of the sale (being the amount the car sold for minus the lender’s expenses for arranging the sale)
  • the amount required to pay out the loan
  • any further recovery action to be taken by the lender against you.