What To Do If You Can’t Make Your Car Payment
Sitting down to pay your bills and discovering you’re coming up short for your car payment is a scary moment. You rely on your vehicle for so many things, and the thought of not having it is shocking. Fortunately, there are things you can do to avoid getting to the point where your vehicle is repossessed. Here’s what to do if you can’t make your car payment:
Double Check Your Budget — Before you decide for sure you can’t make the car payment, take a look at all your other spending. See if there are things you can eliminate for the month, such as dining out, that will free up money to allow you to pay. You can also try selling some assets, such as unused fitness equipment or forgotten jewelry, to make up the cash shortfall.
Contact the Lender — If you review your budget and realize you’re still not going to be able to pay, contact the lender. Being proactive will help ensure you have the most options available. If you are experiencing a temporary financial hardship and anticipate being able to resume payments in the next month or two, the lender may be willing to accept a reduced payment or defer payments for a short amount of time and add those months on to the end of your loan.
Refinance Your Loan — You may be able to refinance your loan to achieve a lower monthly payment. However, this option is usually only available to consumers with very strong credit, and not all vehicle loans are eligible for refinancing. If your loan does qualify, you may have better luck refinancing through a credit union or community bank.
Sell the Vehicle — If you know your financial challenges aren’t going away anytime soon, consider selling the car to pay off the remainder of the loan. Do your best to sell it for enough to pay off the loan in full. If you sell it for less, you will have to make up the difference before you can transfer the title to the new owner.
Turn Over the Keys — Sometimes referred to as a voluntary repossession, you can surrender the vehicle if you know you won’t be able to pay going forward. It’s not an ideal solution, but it will stop the car from being repossessed at a time and place you’re not expecting. Keep in mind that you will still have to pay the deficiency balance, which is the difference between what you owe and what your car sells for at auction.
If you find yourself unable to make your car payment or any other bills, our free Credit Counseling can help you develop a realistic budget and a plan to get back on track.