Struggling with car loan repayments: your rights and options

6 min read · Updated 23 October 2026 · Sources at the end

If a car loan repayment is going to be late, or already is, you have more options than it can feel like. You have a legal right to ask your lender for help, the lender has to consider it and reply, and free, independent advice is a phone call away. This guide sets out the steps, the time limits, and what happens if things go further.

Asking your lender for help

Under the National Credit Code you have the right to ask for a hardship arrangement on loans of any size taken out from March 2013. ASIC's advice is to contact your lender as soon as you're worried about a repayment.

• How: call, email or use the chat of your lender's hardship team. You can ask out loud or in writing. Keep a copy of what you send, or notes of what's said.
• What they may ask: why you're in hardship, your income and main expenses, and what you can afford to repay. Moneysmart's words: "Your lender won't ask for your life story."
• What they can offer: a temporary change, such as deferring repayments for a while, or a permanent one, such as lower repayments over a longer term.
• What to agree to: only repayments you can keep up. If that changes, tell your lender straight away and keep paying what you can.

Ask whether interest keeps building during a pause. If it does, a three-month pause on $20,000 owing at 10% a year adds about $500 to what you owe.

How long the lender has to reply

• Within 21 days of your request, if it needs nothing more from you.
• Within 21 days of getting any information it asked for, or 28 days after asking if you don't provide it.
• If it says no, it must give its reasons and tell you about your right to complain to the Australian Financial Complaints Authority (AFCA). For 14 days after a refusal, it can't start collection action, unless you'd made another request in the previous 4 months.

Your credit report

In ASIC's 2024 research, a third of the people who wouldn't ask their lender for help said they feared it would hurt their credit score. It doesn't:

• a hardship arrangement doesn't affect your credit score, and your report doesn't show the reason;
• the report shows that an arrangement exists for 12 months, then it's removed;
• a missed repayment with no arrangement generally shows as a late payment for 2 years.

If the lender says no

You can complain to AFCA, a free, independent service, on 1800 931 678 or at afca.org.au. While an AFCA complaint is open, the lender can't get a court judgment against you.

What happens before and after repossession

A lender can't take a car straight away. The National Credit Code sets the steps:

1. Default notice. The lender must send a notice giving you at least 30 days to pay what's overdue. If you pay it in that time, the lender can't take further action.
2. Court order in some cases. If less than 25% of the loan, or less than $10,000, is still owing, whichever is lower, the lender needs a court order to repossess.
3. Your home. Lenders and their agents can't come onto your property without your written consent or a court order. A car parked on the street can be towed.
4. Notice within 14 days. After repossession, the lender must write to you with the car's estimated value, its costs and your rights.
5. 21 days to get it back. The lender can't sell the car for 21 days after that notice. Paying the overdue amount and its reasonable costs, or paying out the loan, gets it back. You can also introduce a buyer willing to pay at least the estimated value.
6. Sale and what's left. The lender must sell the car for the best price reasonably obtainable, then write to you with the sale price, its costs and any balance. You still owe that balance.

That last step can hurt. ASIC's 2026 review of car loans found that many people whose cars were repossessed and sold still owed their lender money.

Handing the car back, or selling it yourself

• Handing it back (voluntary surrender) can avoid some repossession costs. If the car sells for less than you owe, you still owe the rest.
• Selling it yourself means you choose how and for how much. The loan is paid out from the sale. Selling a car with finance still owing covers payout figures and what happens when the car is worth less than the loan.

Free help

• National Debt Helpline: 1800 007 007, 9:30am to 4:30pm Monday to Friday, or live chat 9am to 8pm weekdays, at ndh.org.au. Its financial counsellors are free, independent and confidential, and can refer you to legal help.
• AFCA: 1800 931 678, afca.org.au, if you can't sort it out with your lender.
• If money worries are affecting how you feel: Beyond Blue, 1300 22 46 36, any time of day.

Common questions

Sources

• Moneysmart, Financial hardship: contacting the hardship team, what lenders may ask and offer, credit score and the 12-month listing, the National Debt Helpline and Beyond Blue.
• Moneysmart, Just ask your lender for help (updated 31 August 2026): "Your lender won't ask for your life story", only agreeing to repayments you can afford.
• ASIC media release 24-118MR (3 June 2024): ASIC's research on asking for help, including the 32% worried about their credit score.
• Redfern Legal Centre, Financial hardship factsheet (January 2024): who can apply, response times, refusals, the 14-day pause on collection, credit reporting.
• Moneysmart, Repossessed car or goods (updated 19 August 2026): the default notice, court-order thresholds, entering property, the 14- and 21-day steps, sale, shortfall and voluntary surrender.
• Legal Aid WA, I can't pay my car loan: hardship variations, towing from the street, introducing a buyer, AFCA's number.
• Queensland Law Handbook, Repossession of goods (updated 16 September 2025): repossession rules under the National Credit Code.
• ASIC media release 26-132MR (24 June 2026): many people whose cars were repossessed and sold still owed their lender money.
• Lifeline, National Debt Helpline: hours and contact details.
• Worked example: $20,000 × (1 + 10% ÷ 12)³ − $20,000 = $504.

General information only, not financial advice.