Unfortunately, this has been a challenging year in many aspects. Unemployment is no exception. Many people have seen their hours at work reduced while others have had their jobs disappear altogether. When this happens, it results in making tough decisions regarding when and how to spend your money. This may leave you feeling desperate to keep your car. Nobody would blame you for feeling this way. After all, if you don’t have a vehicle it’s very hard to get anywhere. Fortunately, there are some things that you can do to secure your car loan and keep your vehicle from being repossessed.
Talk to your lender
Now is a great time to have a discussion with your lender about your financial difficulties. You may be surprised to learn that lenders have multiple debtors who are going through the exact same thing as you are right now. They won’t be surprised when you call them on the phone to explain to them why you’re unable to make your monthly payment. However, you may be pleasantly surprised by the fact that they may have a program that was set up to help their borrowers throughout the current pandemic.
When you call to discuss your issues with your lender, make sure you’re honest. Tell them about your current financial difficulties and why you can’t pay your car loan. You may have to provide your lender with paperwork that shows you’ve lost your job (e.g. a letter from your previous employer). Make sure you also tell your lender if you think this is a short-term problem and when you expect to be back to work.
This is definitely a phone call you’ll want to make before your payment is due so you can avoid a loan default. Doing so will also give you more options. Remember, once the repossession process is started, your lender may not be able to stop it.
Think about a deferral program
Due to the pandemic, there are a lot of lenders who are deferring payments by 90 – 180 days. This will give you some breathing room so you can find stable employment. If you’re offered this, there are some details you’ll want to discuss, including:
· Does interest continue accruing throughout the deferral? If so, can you just pay the interest?
· When the deferment ends do the loan get lengthened or are your monthly payments increased?
· Are there any additional fees?
· Do you have to sign a new agreement?
Look into refinancing
Refinancing is oftentimes a better option than a deferral, especially if you still have good credit. With decreasing interest rates you’re able to save a lot of money on your monthly payment. Of course, if you’re still unable to make the monthly payment you shouldn’t refinance as it’d be pointless.
Sell your vehicle or trade it in
It’s possible that you’re spending too much on your car – something you may not have realized until now. This could be a good time to downsize and avoid a loan default on your car loan. Selling or trading in your vehicle will allow you to get something cheaper that’ll work better for your budget. Remember, you’re probably going to be responsible for paying the difference between your loan’s balance and your vehicle’s trade-in value. Cars with a high resale value typically have little to no unpaid balance here though.
Unfortunately, you can’t eliminate your car loan by filing for bankruptcy since they’re a secured debt. However, if you’re feeling a lot of financial distress, this still may be the right choice for you. To explore your options contact the Weller Legal Group in Clearwater, FL today.
Picture Credit: Jeshoots