If you’re behind on car payments — or worried you might fall behind — it’s natural to feel anxious. One of the most common questions people ask is, “Will I face jail time if I default on an auto loan in Alberta?”
But let’s clear this up right away for you: no, you will not go to jail for defaulting on an auto loan in Alberta. Missing payments or defaulting on a loan is a financial issue, not a criminal one. While there can be consequences, jail time is not one of them. Keep reading to learn more.
What Does “Defaulting” on an Auto Loan Mean?
Defaulting on an auto loan simply means you’ve stopped meeting the terms of your loan agreement. This might happen if you miss several payments, fall too far behind, or break other conditions outlined in your contract.
Even though defaulting is serious, it’s handled under civil law, not criminal law. That means lenders handle defaults through contracts, collections, and repossessions — not through police or courts, which handle criminal charges. So if you’re worried you’ll face jail time if you default on an auto loan, you can put that fear to rest!
What Can Actually Happen If You Default?
While jail isn’t on the table, defaulting can still lead to some real financial consequences. These may include:
Vehicle Repossession
Most auto loans are secured by the vehicle itself. If payments stop, the lender may have the right to repossess the car.
Credit Score Damage
Missed payments and defaults can negatively affect your credit, making it harder to qualify for loans or better rates in the future.
Collection Activity
Your account may be sent to collections, which can involve phone calls and letters. Collection agencies must still follow Alberta’s consumer protection laws.
Owing a Remaining Balance
If your vehicle is repossessed and sold for less than what you owe, you may still be responsible for the remaining balance.
What Lenders Cannot Do?
It’s just as important to understand what lenders are not allowed to do. In Alberta:
- You cannot be arrested or jailed for unpaid auto loan debt
- You will not receive a criminal record
- Police will not show up because of missed payments
- Lenders cannot threaten or harass you
If anyone suggests otherwise, that’s a red flag.
What Should You Do If You’re Struggling With Payments?
If you’re worried about falling behind on payments, acting early is always the best move. Ignoring the situation can limit your options and make things more stressful than they need to be.
Reaching out early and exploring the right financing can make a big difference. If you’re looking for a practical way to manage short-term cash flow, Mr. GOOD Loans offers car title loans with competitive interest rates and flexible payment options designed to fit real-life budgets. You can use the equity in your vehicle while continuing to drive it — just be sure you understand the terms and feel confident in your repayment plan.
When you’re ready, applying is quick and straightforward, so you can focus on getting back on track without added stress.
