![]() ![]() If your loan contract doesn’t have a grace period or if you fail to cure the default within the grace period, the bank has the right to repossess your vehicle. ![]() If you make the payment during the grace period, you “cure” your default and the loan will go on as if nothing happened. Some loan agreements have a grace period during which you may make your missed payments or otherwise fix the issue before you have any negative consequences. You may also default on your loan for breaking another clause of the loan agreement, such as a promise to keep insurance on the car. If you miss a payment, you break the loan contract and you’re in default. When you take out a purchase money loan for a car, you agree to pay the bank a certain sum of money (equal to a portion of the principal amount plus interest) every month. If you default on your payments, though, the bank may reclaim or repossess your car in lieu of payment. ![]() Most car loans last for a few years, and if you make all your payments, that’s the end of the story. You take ownership of the car and pay the loan back over time, with interest. There are plenty of other types of purchase money loans, but cars are the most common. You get cash from the bank and the bank gets a security interest in your car. You’re probably familiar with how a car loan works. ![]()
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