- What to Do When Struggling With Car Payments
- What Happens If I Can’t Afford My Car Loan?
- Fulfillment of Contract and Subsequent Fees
- Car Repossession
- Low Credit Score
- Ways to Keep Up With Car Payments
- The Art of Negotiation
- Here are some negotiation schemes you can consider:
- Car Refinancing
- Bear these in mind before refinancing:
- Take Advantage of Auto Insurance
- Give Up Your Vehicle
- Consult With a Credit Counselor
- Pave Your Way to a Debt-Free Tomorrow With DebtQuest USA
What to Do When Struggling With Car Payments
“I can’t afford my car payments anymore – what can I do?” If you encounter great difficulties in staying on top of your car payments, you aren’t alone. Given the events that have transpired during the past couple of months, perhaps car loan settlements are not among the top priorities of the majority of the American working class right now.
As a matter of fact, millions of Americans have skipped their credit payments, including auto loans and house mortgages. This is mainly because of the mass unemployment from the dissolutions of many establishments brought about by the COVID-19 pandemic.
While the federal government and lending institutions have been generous with the moratoriums and other financial relief resolutions they offer to borrowers, these are not enough to capacitate them to pay off their loans.
There are several ways to effectively manage your credit, and eventually to get out of a car payment. But it’s hard to choose which action would be the best and most suitable to take, given your financial situation.
It’s a good thing there are debt relief settlement companies like DebtQuest USA that can aid you in making financial decisions while having your best interests in mind. The key to a debt-free future is at your fingertips when you consult with us today!
In the meantime, this page will discuss all that you need to know when you can’t afford a car payment.
What Happens If I Can’t Afford My Car Loan?
Being unable to pay off a loan can be a root cause of many major problems. Skipping loan payments can ultimately lead to evictions, foreclosures, car repossessions, and a very poor credit score, which can largely limit your purchasing power and eligibility to qualify for loans in the future.
Other things that might happen when you can’t pay your auto loan as specified by the Consumer Financial Protection Bureau:
Fulfillment of Contract and Subsequent Fees
When you stop paying off your car loan, you may trigger a termination of your contract and early termination fees. Such fees can cost thousands of dollars.
Upon inability to pay can result in car repossession from your lessor. Lenders may opt to take away your vehicle from you, even without prior notice. They can either sell the vehicle or have you reinstate the loan.
Low Credit Score
Your failure to settle your auto loan account will reflect badly on your credit profile. This can set many limits and restraints to the loans you can take on in the future and can even hurt your purchasing power, given your ineligibility for credit.
Ways to Keep Up With Car Payments
Discard the thoughts of getting your vehicle repossessed or gaining a bad credit profile by considering some of these suggestions on how to be on top of your auto loan payments.
The Art of Negotiation
Talk with your lender and come up with mutually beneficial negotiations. On your part, you have to make necessary adjustments to your payment methods to comply with payment procedures and regulations.
On their part as lenders, they would want to keep you, and thus would be obligated to come up with alternatives that can enable you to continue with your payments.
Take a step back and reassess your financial standing and capability. Then, review the existing terms you have with your lessor and come up with proposed alternatives that mutually cater to your interests. Set up an appointment with your lessor, and step your best foot forward with transparency, honesty, and smartness.
Here are some negotiation schemes you can consider:
- Lengthen the term of your loan to lower your monthly payments
- Lower your payments for a shorter span of time
- Provide moratoriums
In any case, there is a flipside of accruing more interest for the vehicle you already have difficulties in paying for. But this is better than nothing and can still score you an advantageous deal.
If negotiations are not enough, you can proceed with refinancing your car. This means you will replace your existing car loan with a totally new one—including new and more affordable terms. In most cases, borrowers resort to refinancing to obtain a more affordable monthly payment.
Bear these in mind before refinancing:
- Eligibility— Banks have their respective requirements for refinancing. Be sure to tick all the boxes to qualify for one.
- Auto loan refinancing calculator— Utilize these kinds of resources to accurately determine whether refinancing is a viable option with your financial situation.
- Underlying interests— It makes sense to refinance if the new loan comprises of significantly lower interest rates. Otherwise, it might not be wise to refinance.
- Credit Performance— Having a preferably good or at least decent credit score can allow you to claim lower interest rates.
Take Advantage of Auto Insurance
Always take note of other sources of funds that can help you in paying your auto loan expenses. Lenders and lending institutions have advised borrowers to have an insurance plan to provide for their collaterals in the face of accident or death. If you don’t have one, the lending companies themselves can assign one of their insurance providers to you.
Fortunately, there are auto insurance organizations that are offering several financial assistance programs to help Americans pay off their dues. Here are among the most well-known and top-rated insurance providers at present:
Give Up Your Vehicle
Know when it is time and when it is more valuable to simply let go of your vehicle. If you cannot really continue with the cost of an auto loan, you might ask yourself- how do I voluntarily surrender my car?
This is referred to as voluntary car repossession. It works the same way with involuntary repossession; the difference is you don’t have to anxiously wait for the lessor to retrieve your vehicle.
To surrender your car, you must inform and set an appointment with your lender. The creditor then resells the vehicle, and the borrower is still obliged to pay any deficiency balance, or when the price of the sold vehicle is still insufficient to cover the loan you owe.
Given your retained obligations, whether you voluntarily or involuntarily get your car repossessed, voluntary repossession only makes sense if you are a hundred percent certain that loan payments are already unbearable for you. This can also reflect poorly in your credit history.
If you still have the means to salvage your auto loan, that is the ideal course of action.
Consult With a Credit Counselor
Having no insight from an expert can lead to you making wrong and misinformed decisions. If you are not entirely sure about what to do when you can’t afford your car payments, it is highly suggested that you seek the help and aid of credit counseling agencies.
With DebtQuest USA, you can still be able to pay off your car loan. What happens when you pay off a car loan:
- Your leaseholder can release pertinent documents for you to transfer the title and legitimize your ownership of the vehicle.
- You can contact your auto insurance provider for better deals and rates without the approval of your previous lender.
- You can save extra funds from all the interest payments that you have surpassed.
- You can go for long drives with zero worries!
Pave Your Way to a Debt-Free Tomorrow With DebtQuest USA
Auto loan payments may be just a chunk of the many debts you have to settle aside from house mortgages and other personal debts. You need a trusted financial counselor or an effective debt relief expert to guide you on how to get out of a car loan – or out of debts in general. Talk to one of our representatives today!