What To Do If You Need Help With Monthly Car Payments

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First, discuss payment assistance with your lender. Then consider refinancing or selling your car.

As the cost of vehicles rise, monthly car payments are also rising. In fact, the latest numbers indicate that the average monthly payment for a new car purchase is $733. That’s enough to take a big bite out of anyone’s budget.

With that significant figure in mind, it might not be surprising that 1.81% of households were more than 90 days behind on their car payments in the second quarter of 2022. If you need help with your car payment, the good news is that you’ve got options.

Let’s explore the strategies you can use to get the help you need with your car payment.

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What To Do if You Can’t Make a Car Payment

When you first agree to monthly car payments, it can be tough to make a large sum fit into your budget. At some point, you might run into a tight financial spot that leaves you unable to make your car payment.

If you end up in this situation, here are six strategies that can help.

1. Communicate with your lender

In many situations, you’ll know that you can’t make your car payment ahead of the deadline. For example, you might have an unexpected emergency come up that derails your carefully planned budget.

It’s a good idea to start communicating with your lender as soon as you realize there’s a problem on the horizon. The sooner you let your lender know, the better off you might be.

Believe it or not, many lenders are willing to work something out with their borrowers. But if you don’t let them know about your financial hardship, they won’t be able to help. After all, they’ll need to know that you are looking for a helping hand before they can offer one.

This strategy is especially useful due to payment assistance programs many lenders started to offer during the coronavirus pandemic. Although your eligibility may vary for these programs, it’s worth asking your lender if they offer any payment assistance programs.

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2. Ask for a deferment

After the lines of communication are open, ask your lender for a deferment. With a deferment you can delay that month’s payment, but the lender will expect the full payment at some point.

The details of your deferral payment plan options vary based on the lender. In some cases, the lender will let you skip one or two payments as you get back on your feet after a financial hardship. In other cases, the lender won’t offer any kind of deferment.

Ultimately, the decision to grant a deferment or not is up to the lender. But if you explain the details of your financial hardship, they may be more willing to provide the helping hand you need.

3. Ask for a new due date

If your budget is carefully planned around your paycheck, an inconvenient payment due date could spell disaster. You might not have the funds you need to make the payment until later in the month. In this situation, request to change your payment due date.

The lender might happily agree to change your due date to a more convenient time of the month. After all, the lender wants to see your loan payment come in each and every month. Many are willing to accommodate a request that ensures you’ll be more likely to make on-time payments.

4. Refinance your auto loan

If a car payment is taking too big of a toll on your budget, the quick fix offered by a deferment or new due date might act like a bandaid on a bigger issuer. A car payment that’s eating up too much of your income is unsustainable.

When a car payment is too large, refinancing your auto loan could be a solution. With a refinance, you can potentially lock in a lower monthly rate with the help of a lower interest rate or longer loan term.

A lower interest rate means you’ll save on interest payments over the loan term and potentially see lower monthly payments. Although, you might end up paying more in total interest after a refinance, stretching out the loan principal into a longer loan term can help make monthly payments more affordable.

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5. Sell the car

Sometimes the best solution for your wallet is to eliminate the car payment altogether by selling your vehicle. Even if you still need a regular ride, selling your car is still a viable option because you could trade it in for a more affordable vehicle.

This isn’t the right solution for everyone, but for some it can help eliminate crushing auto loan payment. Plus, there might be a cheaper used car out there for you.

6. Surrender the vehicle

Some lenders allow you to surrender your car to avoid a forced repossession. After you turn over the vehicle, the lender will sell it and apply the funds from the sale to your loan balance.

As long as you aren’t upside down, or owe more than the vehicle is worth, this could eliminate the debt once and for all. But if the proceeds from the sale don’t cover the loan balance, you’ll have to pay the remaining amount to the lender.

What Not to Do: Get a Payday Loan

Although it’s tempting to take out another loan to cover the cost of your car payment, that’s usually not the right move.

Many borrowers might feel like a payday loan is the only way to make ends meet. But ultimately, payday loans usually end up making things worse due to high interest charges and short repayment periods.

If you feel the draw towards another loan to solve this payment issue, try to resist the urge. Additionally, try not to put the payment on your credit card. The notoriously high interest rates tied to credit cards can make your financial situation even more difficult.

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How To Catch Up on Your Car Payments

When you are behind on your auto loan payments, it can be a challenge to get back on track. Although it’s not always easy, it is possible to readjust and catch up on your car payments.

After talking with your lender about any immediate relief options, it’s time to take a closer look at your spending. Depending on your situation, you might realize that you need a major budget overhaul.

If your car loan is simply too high for your budget, finding a more affordable vehicle is one option. But if you don’t want to part with your ride, you might need to make cuts to other kinds of spending in your budget or look for ways to increase your income.

For some, picking up a side hustle on a temporary basis is the key to catching up. For others, making cuts to their discretionary purchases, like entertainment and travel, frees up the funds they need to catch up with their payments.

The right combination of strategies varies for everyone. But a little bit of creativity can go a long way when looking for the money you need to make ends meet.

What Happens if You Default on Your Auto Loan?

When you miss a car payment, the lender can consider your account to be in default right away. However, you might have a grace period of several days before you face late fees.

If you don’t make the payment within 30 days, your lender can report the loan as delinquent to the credit bureaus. When it shows up on your credit report, the missed payment will start to have a negative impact on your credit score.

Hopefully, you’ll be able to work something out with the lender to catch up on your payments. But if not, the loan will be considered in default. The timeline for default varies based on the lender. It could be when you miss your first payment or haven’t made a payment in 90 days.

After the default is official, the lender might start to get more aggressive in their collection strategies. In some cases, your vehicle might even be repossessed by the lender.

Firstly, Discuss Payment Options With Your Lender

If you need help with a car payment, the first place to ask for a helping hand is with your lender. Depending on your situation, the lender might be able to offer the temporary reprieve you need as you get back on your feet.

But if the problem is more deeply rooted in your finances, then it might be time to make some major changes. You might consider a refinance, selling the car, or adjusting your budget to make your car payment a priority.

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About The Author


Sarah Sharkey

Sarah Sharkey is a personal finance writer who loves diving into the details to help readers make savvy financial choices. She has written for numerous finance publications, including Business Insider, Smart Asset, and Money Under 30. She lives in Florida, with her husband and dogs, and enjoys exploring a new stretch of coastline whenever she can.


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