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4 minutes read. Published April 19, 2022
Written by Dan Miller Written by Points and Miles Expert Contributor Dan Miller is a former contributor to Bankrate. Dan wrote about loans as well as home equity and managing debt in his writing. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to control their finances with concise, well-studied information that breaks down complicated subjects into digestible pieces. The Bankrate promises
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If you have questions about money. Bankrate has the answers. Our experts have been helping you master your money for over four decades. We are constantly striving to give our customers the right advice and tools needed to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is honest and accurate. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the best financial decisions. The content created by our editorial staff is factual, objective and uninfluenced through our sponsors. We’re open about the ways we’re in a position to provide quality information, competitive rates and helpful tools to you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods and, services, or when you click on specific links on our site. So, this compensation can affect the way, location and when products appear in listing categories in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other factors, like our own rules for our website and whether a product is available within your area or at your own personal credit score may also influence the way and place products are listed on this website. Although we try to offer an array of offers, Bankrate does not include the details of every financial or credit product or service. One of the most important aspects of creating an effective budget is incorporating every single expense within your budget. In your regular review of your budget, you may encounter a situation that you think you’re not able to afford the car payment. If that’s the case there are a variety of options to find relief. Each option come with their particular pros and cons, so you’ll want to review them carefully to see which option could be the most suitable for your needs. Contact the dealership to request trade. The first step that you can do is to reach out to your dealer to see if they can swap your car to a less expensive model. This might be easier to work out when you purchased your car through the dealership and the loan is funded through it. This could make the dealer more flexible in working things out with you. But even if that isn’t the case, it is worth contacting the dealership to inquire about what options are open to you. Based on the difference in price between your new and current cars, and the term and , you may be capable of saving a substantial sum of cash by switching purchasing buy a lower-cost car. Be aware that current prices may make trading your car slightly more difficult. The prices of used cars have climbed significantly over where they were a few years ago. Also, depending on the type of vehicle you’re trading in and what kind of vehicle you’re hoping to buy it could be more challenging than you expected. Request loan change Another possibility that you can consider if you are unable to make the monthly car payment, is to apply for an . Through a loan change, you work together with your lender to alter the terms of the loan. It could mean decreasing your interest rate, delaying payments for a time or altering the due date to align better with your schedule. A loan modification may also prolong the term of your existing loan. It will typically lower the monthly payment, however you’ll pay more interest over the course of your loan. You should be careful and ensure that the numbers are in your favor you prior to committing to any modification. Refinance your auto loan When your lender will not alter the terms of your loan You also have the option of refinancing . It is possible to shop around and apply for prequalification with a variety of lenders to get the best rate and conditions. If you are a member of the local bank or credit union You may be able to obtain better rates as you already have a history with them. Before you refinance your auto loan check whether you’re eligible. Even if you have a poor credit rating, you may be eligible if you can pay off your auto loan in a short time or have improved your credit score. Be sure to check if there are any fees associated with refinancing an auto loan. There are fees that include the early termination fee and transaction fee and state registration fees. auto insurance cost and late payment fees. Take a look at this as a possible method to refinance your vehicle: Decide if refinancing is the right financial move. Examine your current loan. Check your credit score. Calculate the value of your car. Find the most competitive refinancing rates. Determine how much you’d save when refinancing. Make sure you have your paperwork in order. Sell privately and purchase within your budget If you aren’t able to pay for your car right now, another possibility to think about is selling your car privately and purchase a new vehicle which is more compatible with your budget. There are a few more steps in , but it is nevertheless feasible. The current market is ideal for selling an older car, with prices significantly higher than previous years and you could be able to get a great price. Of course, the other downside to a highly-priced used car market is that it might be harder to locate an appropriate replacement vehicle that is within your budget. It is important to research the market and find out the price to buy your replacement car. This will provide you with an idea of how much you’ll save by switching cars and whether it will be worth it for you. Ask friends and family for assistance. A last resort could be to contact relatives and friends for assistance. This could or might not be a great option for you based on the relationship you have with your friends and family, and their financial situation. If you’re in a situation where you can’t afford the car loan, talking with those that are closest to you could be a viable option to think about. Be aware that help from relatives and friends doesn’t necessarily have to be financial. Although it would be wonderful having a wealthy uncle who would just pay off your loan immediately, most of us are not in that situation. But in addition to possible financial assistance the family members and friends of yours might be looking to sell a used car or know someone that has. Those kinds of connections might help you save money. Next steps When you’re in a situation that you are unable to pay your car payments, recognizing and taking a look at your financial situation is the most important step. In the event of ignoring the issue, or even worse, missing payments for your vehicle loan will cause major problems with your financial health overall. If you’ve discovered the issue then you need to look into your options. Talk to your lender first, to see if they would be willing to alter the terms of your loan. The lenders don’t like changing existing loans however, they aren’t keen on repossessing cars. You must convince them of why a modification is necessary to continue making payments. Based on your circumstances as well as your credit rating, you could be able to refinance a loan and potentially save cash. Be sure to study the fees that are associated with refinancing, and review the conditions of your loan agreement prior to taking any action. Frequently asked questions What do I do if I can’t pay for my car? If you’re unable to make payments on your car loan, now is the right time to act. Review your options below: Reach out to your lender to determine if you are able to defer payments, consider the possibility of obtaining an alternative loan, trade in your car or trade it in or give up your vehicle in a voluntary manner. What are the fees that are associated with refinancing an auto loan? The costs associated with refinancing an existing auto loan may include an early termination charge, transaction fees and state registration fees. They also include auto insurance costs, late payment fees and an upfront cash payment. Can you refinance a car loan with a poor credit score? You may be qualified for a refinance loan even if you have a bad credit score. Find out more
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Authored by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan covered loans home equity, loans and managing debt in his work. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to take control of their finances by providing precise, well-studied facts that break down complicated topics into digestible pieces.
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