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4 min read Published on October 27, 2022.

Written by Allison Martin Written by Allison Martin’s work started over 10 years ago as a digital content strategist, and she’s since been published in several leading financial media outlets, such as The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Written by Rhys Subitch The editor is Auto loans Editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain the confidence to manage their finances with detailed, well-studied facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee

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So, this compensation can influence the manner, place and in what order products appear within listing categories, unless prohibited by law for our mortgage, home equity and other home loan products. Other factors, like our own website rules and whether the product is offered in your region or within your personal credit score may also influence the manner in which products appear on this website. While we strive to provide an array of offers, Bankrate does not include specific information on every financial or credit item or product. Are you struggling financially and are unable to pay your car payment? If your lender provides modifications on car loans, you may be able to receive much-needed relief. Modifying your loan involves changing your monthly installment amount as well as the due date and sometimes the interest rate. If you’re behind with your payments, these options can aid in avoiding the damage to your credit score and getting your car taken away. What car loan modification means? As the name implies, a car loan modification involves altering the terms of your loan. The lender might agree to reduce the amount of your loan, delay your payments in the short term or change your payment due date so that it is better for your budget. There is also the option of getting an , which spreads the amount that you loan out in order to reduce your monthly payments. But extending the repayment period is also a sign that the lender will have more time in collecting from you, which means you’ll have to pay more in interest unless you’re back on track . Loan modification is not readily available to all borrowers, however. Although lenders are generally not fond of repossessing the vehicles of people who’ve fallen behind on their loans however, you’ll need to plead your case. The first step is convincing your lender that you will not be able to repay what you owe unless they consent to modifying your loan. This could mean providing financial documentation to prove you are experiencing hardship. How to get a car loan modified You’ll need to contact the lender who created this loan direct to clarify your situation and determine your possibility of a loan modification. Be mindful that lenders will generally review your past payment record prior to making a decision. It’s worthwhile to reference your past performance as a good customer and managed your loan responsibly. If you’ve had problems with payments in the past, it could be more difficult to convince the lender to alter your loan. In any case follow these steps to begin the process. Contact your lender immediately. Inform your lender that the auto loan payments are no longer affordable and you risk falling behind in the near future. Tell them about your situation and the reason you are struggling to make payments. The representative may share temporary options for relief but you must ask to speak to someone who can help you as you’re seeking an alternative that lasts. It’s helpful to state that you would like to keep the car, but need help accomplishing that goal. Be specific, and use a friendly tone throughout the phone conversation. Write your request down If loan modification is possible, you’ll typically be required to put your request in writing. The request should be submitted to the lender, along with proof of your hardship and any other information or documents that the lender requests. Provide the lender as much detail as possible about your situation. If you lost a job or suffered a significant or unexpected life change, share that information in your hardship letter. It is an excellent idea to explain how the modification will benefit you, like allowing you to continue making payments or make payments in time. Your lender might also need financial documentation such as documents from your bills for the month and statement from your bank or stubs. Confirm the receipt of your hardship request After you have turned all of the required documents in, the waiting game to hear from the lender commences. If you’re not hearing back, try to pay what you can since repossession could occur as you wait for a decision on loan modification. Keep the people who are helping with your modification up-to-date, explaining that you are still trying to make payments even when you face financial hardship. How do you know if you should alter your car loan Consider modifying your car loan in the event that your financial situation has abruptly changed due to an unexpected job loss, temporary layoff or furlough, medical emergency or another event that is out of your control. It might also be a wise financial move if you have recently had a decrease in your earnings. You might also want to consider an loan modification if your vehicle is worth far less than the amount you owe. This means you’re . selling it to purchase a more affordable vehicle would be a challenge and could cost you a fortune. A car loan modification and. refinancing It’s easy to mix auto loan modifications with refinancing, however the two aren’t quite identical. Both could lead to an easier payment. However, unlike the auto loan modification, refinancing your loan involves swapping your current loan for a brand new one with different conditions. It is likely that you will need good or excellent credit to qualify, and you’ll have to go through the same application process similar to the one you went through when you applied for your current loan. The majority of lenders will also require that the mileage on your vehicle doesn’t exceed 100,000 miles. You are unlikely to be eligible when your vehicle is older than 10 years old. If your application for the new loan is accepted then the lender will pay off your old loan and you’ll be able to resume your payments to the current lender. But with a car loan modifications, it’s your responsibility to have to work alongside your existing lender during the process. The bottom line: It could be stressful if you can’t afford your car payment and aren’t in a position to refinance, but you don’t have the option of doing without a vehicle. Think about contacting your lender to ask for a loan modification. Request a reduction in monthly payments or a lower amount of interest or the option of a different due date to help you make payments punctually. If a modification isn’t an option, there are other programs that will aid you in locating relief until you get your finances back on track. Find out more


Allison Martin’s work began more than 10 years ago, as an online content strategist and she’s since been featured in several leading financial outlets which include The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers feel confident to control their finances with concise, well-researched, and clear facts that break down complicated topics into digestible pieces.

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