What to do when you can’t afford your car payment Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive tools and financial calculators that provide objective and original content. This allows users to conduct research and compare data for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Profit The offers that appear on this website are provided by companies who pay us. This compensation could affect how and when products are featured on this site, including the order in which they may appear in the listing categories and other categories, unless prohibited by law. Our loans, mortgages,, and other products that lend money to homeowners. However, this compensation will not influence the content we publish or the reviews that appear on this website. We do not cover the universe of companies or financial deals that might be available to you. Westend61/Getty Images
4 min read Published April 19 2022.
Authored by Dan Miller Written by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan was a writer for Bankrate who covered loans home equity, loans and managing debt in his writing. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to take control of their finances by providing concise, well-studied facts that break down complicated topics into bite-sized pieces. The Bankrate promise
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We are compensated in exchange for placement of sponsored products or services, or when you click on certain hyperlinks on our website. Therefore, this compensation may affect the way, location and in what order products appear in listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, like our own website rules and whether the product is offered in your area or at your self-selected credit score range could also affect the way and place products are listed on this website. We strive to offer the most diverse selection of products, Bankrate does not include information about each financial or credit item or service. An important part of the success of a budget is to fit every single expense within your income. As part of your routine review of your budget, you could be in a position that you think you can’t afford the car payment. If that’s where you’re at you’ve got a few options to find relief. Each of these options come with their own set of advantages and disadvantages, and you should look them over carefully to decide which is the best for you. Contact the dealership to request an offer to trade in your vehicle. The first step that you can take is to call your dealer and see if you can trade in your vehicle to get a cheaper version. It might be simpler to figure out if you originally bought your vehicle through a dealership and the loan is financed through it. This could make the dealer more flexible in discussing the details with you. But even if that is not the case, it is worth contacting the dealer to find out what options might be at your disposal. Based on the cost difference between your new and current cars, and also the time and the length of time, you might be capable of saving a substantial quantity of dollars by changing to a less expensive car. Be aware that the current market circumstances could make selling your car slightly more difficult. The cost of used cars has climbed significantly over where they were a few years ago. Therefore, based on the kind of car you are selling and the kind of vehicle you’re hoping to purchase this could prove more challenging than you expected. Request a loan modification Another option that you have if you can’t pay for your car is to apply for a . With a loan change, you work together with your lender to change the conditions of the loan. It could mean the reduction of your interest rate, deferring payments for a period or altering your due date so it aligns more closely with your timetable. A loan modification can also extend the time frame of your existing loan. This will usually lower your monthly payments, but you’ll pay more in interest over the life of your loan. It is important to be cautious and ensure that the numbers are in your favor you before agreeing to any modifications. Refinance your car loan When your lender will not alter the terms of your loan You have the option to . You can shop for a prequalification with several lenders to determine the most favorable rate and terms. If you have an account with a local bank or credit union, you might be able to obtain better rates because you have a long-standing relationship with them. Before refinancing your auto loan check whether you qualify. Even the case that you have a bad credit rating, you might be eligible if you can pay off your auto loan quickly or you have increased the credit rating of your. Be sure to check whether there are any charges associated with refinancing an auto loan. There are fees that include the early termination fee, transaction fees as well as state registration fees. insurance costs for autos and late payment charges. Take a look at this as a possible method to refinance your vehicle Choose if refinancing is the right financial move. Check the current loan. Review the credit rating. Estimate the value of your car. Find the most competitive refinancing rates. Find out how much you could save when refinancing. Get your paperwork in order. Sell privately and purchase within your budget. If you can’t afford your car payments right now, another possibility to consider is to sell your car privately and purchase a new vehicle that’s more within your current budget. There are more steps involved in , but it is still definitely doable. This market has been good for selling a used car, as prices are significantly more expensive than they were in the past and you could be able to get a great price. Of course, the flip aspect of a booming used car market is that it may be more challenging to find the right replacement car to fit your budget. Make sure to research the market thoroughly and know the price to buy a new vehicle. This will give you an idea of how much you’ll save by changing cars and whether it will be worth it for you. Get help from your family and friends assistance. The last option could be to approach relatives and friends for assistance. This could or might not be a great option for you depending on the relationship you have with your friends and family, and their financial situation. However, if you’re in a situation in which you are unable to afford the car loan, talking with those that are closest to you may be a viable option to consider. Be aware that the help of relatives and friends doesn’t necessarily have to be financial. While it would be great to have a wealthy uncle who would take care of your loan immediately, most of us aren’t in that type of scenario. In addition to financial help, your friends and family may also be trying to sell their car or know someone who is. These connections could help you save money. If you’re in a situation in which you’re unable to make car payment, acknowledging and taking a look at your finances is the most important step. Ignoring the situation or, even worse, missing payments to your auto loan will cause major problems in your financial standing. Once you’ve identified the issue you should look into your alternatives. Contact your lender first, to see whether they are willing to modify the terms of your loan. They don’t want to modify existing loans However, they do not like repossessing vehicles. Be clear about the need for a modification to ensure you continue to make payments. Based on your personal situation and credit score, you could be eligible to refinance your loan and potentially save money. Be sure to research the costs associated with refinancing and read the terms of your loan contract before making any decision. Most frequently asked questions What should I do if I’m not able to afford the car payment? If you’re unable to make payments on your car loan, now is the right time to act. Explore these options: Reach out to your lender, consider deferring payments, think about taking out a new loan or swap your car in for a new one, trade it in or give up your car voluntarily. What are the charges associated with refinancing an auto loan? Costs for refinancing an existing auto loan could include an early termination fee, transactions fees including state registration fees, insurance for autos late payment fees, and an up front cash payment. Can you refinance the car loan even if you have a low credit score? Yes, you could be qualified for a refinance loan even if you have a bad credit score. Find out more
Written by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan was a writer for Bankrate who covered loans home equity, loans and debt management in his work. Written 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 feel confident to control their finances with precise, well-studied information that breaks down complex topics into manageable bites.
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