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4 min read . Published April 19, 2022
Dan Miller Written Dan Miller Written by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan covered loans as well as home equity and debt management in his writing. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to take control of their finances with precise, well-studied and well-informed facts that break down complicated topics into bite-sized pieces. The Bankrate promises
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We are compensated for placement of sponsored products or services, or through you clicking certain hyperlinks on our website. This compensation could impact how, where and in what order products appear in listing categories, except where prohibited by law. We also offer mortgage home equity, mortgage and other home lending products. Other factors, like our own website rules and whether a product is available within your area or at your own personal credit score can also impact the manner in which products appear on this site. Although we try to offer an array of offers, Bankrate does not include details about every financial or credit product or service. One of the most important aspects of creating the success of a budget is to fit every single expense within your budget. As part of your ongoing budget review, you might find yourself in a situation in which you feel you’re unable to pay for the car payment. If that’s where you’re at you’ve got a few options to find relief. Each option comes with its particular pros and cons, and you’ll want to review them carefully to determine which one might be right for you. Contact the dealership and request trade. The first step that you can do is to reach out to your dealer to see if they can trade your car in to get a cheaper version. It might be simpler to figure out in the event that you bought your car through the dealership and your loan is financed through it. This could make the dealer more receptive to working things out with you. Even if this isn’t the case, it is worth contacting the dealer to see the options open to you. Based on the cost difference between the two cars, and the term and conditions, you might be capable of saving a substantial sum of cash by switching choosing a less expensive vehicle. Be aware that the current market situation could make selling your vehicle slightly more difficult. The cost of used cars has dramatically increased from the last few years ago. Also, depending on the kind of car you’re selling and the kind of car you’re planning to purchase it could be more challenging than expected. Request loan modification Another option you can consider if you are unable to pay for your car is to ask for a . With the option of a loan change, you collaborate together with your lender to change the terms of your loan. This may include the reduction of your interest rate, deferring payments for a period or changing your payment’s due date so it aligns more closely with your timetable. A loan modification can also extend the time frame of your existing loan. This usually reduces the monthly payment, however you’ll be paying more interest over the duration of your loan. You should be careful and make sure that the numbers are in your favor you before deciding to accept any changes. Refinance your auto loan When your lender will not alter the terms of your loan You have the option to . You can search for a prequalification with several lenders to get the best rates and conditions. If you have accounts with the local bank or credit union it is possible to obtain better rates since you have a long-standing relationship with them. When you are considering refinancing your car loan check whether you qualify. Even if you have a poor rating on your credit report, you might be eligible if you are able to pay off your car loan in a short time or have improved you credit scores. Also, make sure to determine if there are any fees that are associated with refinancing your auto loan. Certain fees are the early termination fee, transaction fees, state registration fees, auto insurance cost and late payment fee. Take a look at the following as a good procedure to refinance your car Consider refinancing as the best option for you financially. Examine your existing loan. Examine your credit score. Determine the worth of your car. Compare refinancing rates. Calculate how much you’d save by refinancing. Get your paperwork in order. Sell privately and purchase within your budget If you can’t afford your car payments at the moment, another option to think about is to sell your car privately and purchase a different car that is more within your current budget. There are a few more steps in , but it is still definitely doable. This market has been favorable for the sale of a secondhand car, with prices significantly higher than previous years, so you may get an excellent price. However, the negative downside to a highly-priced used car market is that it may be harder to locate the right replacement car to fit your budget. Make sure to research the market and understand the price to buy a new car. This will give you an idea of the amount you’ll save when you switch cars , and whether it’ll be worth it to you. Request help from family and friends. assistance A last resort may be to contact relatives and friends for assistance. It could or might be the best option for you based on your relationship with your friends and family, and their own financial situations. But if you’re in a situation in which you are unable to afford the cost of your car, speaking with those that are closest to you might be an option to consider. Remember, too, that the help of family and friends doesn’t have to require a financial commitment. While it’s great to have a wealthy uncle who would just take care of your loan in a matter of minutes, the majority of us aren’t in that situation. In addition to financial assistance, your friends and family might be looking to sell their car or have a friend who is. Those kinds of connections might assist you in saving money. Next steps When you’re in a position that you are unable to pay your car payment, acknowledging and taking a look at your finances is the most important step. In the event of ignoring the issue, or more importantly, not paying on your car loan will cause major problems in your financial standing. Once you’ve identified the issue then you need to look into the alternatives. Contact your lender first, and ask whether they are willing to modify the terms of your loan. The lenders don’t like changing existing loans, but they also aren’t keen on repossessing cars. You must convince them of why it is important to modify your loan to continue making payments. Based on your personal situation and credit score, you might be eligible to refinance your loan and potentially save cash. Be sure to research the charges that are associated with refinancing, and review the terms of your loan agreement before making any decision. Frequently asked questions What do I do if I can’t afford my car payment? If you’re unable to make payments on your car loan, now is the time to take action. Review these options: Reach for your lender and determine if you are able to defer payments, think about getting a new loan or sell your car, or let it go or sell your car voluntarily. What are the charges associated with refinancing an auto loan? Fees associated with refinancing an auto loan could include an early termination charge as well as transaction fees and state registration fees. They also include auto insurance costs, late payment fees and an upfront cash payment. Is it possible to refinance the car loan with a poor credit score? Yes, you may be qualified for a refinance loan even if you have a low credit score. Find out more
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Written by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan wrote about loans home equity, loans and debt management in his writing. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers feel confident to control their finances through providing precise, well-studied facts that break down complex subjects into bite-sized pieces.
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