What You Should Do When You Can’t Make Payments on Your Car Loan

What You Should Do When You Can’t Make Payments on Your Car Loan

If you find yourself in a situation where you are having trouble making payments on the car loan you took out, you will need to know what actions to take. A lot of people get discouraged and allow themselves to default on the loan altogether, which results in a huge strike against their credit. If you want to preserve your credit score as much as possible, you will definitely want to know what to do step by step. This article can save you from a lot of grief and negative consequences later on.

Contact Your Lender

Anyone who thinks that they might not be able to pay back their car loan on time should immediately call their lender. While you might be tempted to simply ignore the lender to avoid an awkward situation, this is the worst possible thing you can do. Instead you should call your lender and see if they would be willing to work with you to come up with some sort of alternate arrangement.

The lender wants you to pay off your loan too, so they will likely be willing to help you out to a certain extent. A lot of lenders are willing to give borrowers some extra time to pay back the loan if they need it. You might only get a two or three additional weeks to pay back your loan, but that could be all you really need. The amount of time you get to pay your loan back past the original due date will just depend on your lender.

Expect Additional Fees

Pretty much anyone who is late paying back their car loan can expect to pay late fees, which in turn can make it even more difficult to clear the full balance of your account with the lender. Sometimes lenders are willing to waive the fees, but don’t count on it. The amount of money you will end up paying in these fees will depend on your lender though. Some lenders charge more than others for late fees, so you should keep that in mind if you are in this type of situation.

Refinance Your Car Loan

Refinancing your car loan can be another great way to pay off the money you owe on time if you start struggling to cover each of your monthly payments. This option makes sense for a lot of people, but you will still need to consider the details of your circumstances before making a choice. When you refinance your car loan, you are essentially replacing your current loan with a new one, except hopefully with a lower rate. Many people who have refinanced their car loans have gotten a lower rate, which makes paying back the loan in full and on time easier.

Trade it in

Trading in your car is something else that you might want to think about doing if you want to get a better rate. Keep in mind that you probably won’t get as much with a trade-in as you would from a private sale. The first thing that you will have to do is get your vehicle appraised so you know what the overall value is. After you have done this you will need to negotiate for a reasonable price, which may or may not happen. It is important to know when to walk away if all you can get for your car is a ridiculously low amount.

Find Someone to Take Over the Payments

You should also look into finding someone else to take over the payments on your no credit check payday loan by selling them the car. Depending on where you live this might not be possible, but it’s certainly an option that is worth looking into. This will also depend on the lender, so contact them before you do anything. You certainly don’t want to unknowingly do something that violates the terms and conditions of your loan. Although you might have a difficult time finding a buyer if you already have an active loan on it, this could be a great solution to your problem. Talk to people you know to see if any of them might be interested. If you have a fairly low interest rate on your loan, you might have an easy time finding a buyer.

Sell the Car

You might be able to actually sell the car, though it’s not guaranteed that you will get enough to pay off the rest of what you owe. If you still have quite a bit left to pay on the loan, this is an option that could work out well. Those who only have a few more payments to make should think about taking a different course of action. You will again want to check with the lender to make sure that this is something that you can actually do, because it might not be allowed.

Give the Car Back

While it is a bit of a last resort, voluntary repossession is something that you will want to keep in mind. This basically just involves turning in the keys to the lender and letting them take it back. Your credit will likely be negatively affected, and you will have to pay back whatever amount is left after the lender auctions the vehicle off. This option does not absolve you of your responsibility to pay the loan back, but it’s by far the easiest way to go if you have run out of other options.

Final Thoughts

It’s always a good idea to try to work with your lender before doing anything. These days a lot of lenders are more flexible than they used to be when it comes to extending loan due dates. If you want to get more time to pay back your loan in full, you will first need to call up your lender. Chances are you will be able to work out something with them. Don’t simply default on your loan, because your credited will be mangled.