There’s no shame in asking for help, especially with your finances. Many of us are embarrassed to be struggling with bills, but we shouldn’t be. Bad luck can happen to anybody, and what’s important is working to get back on your feet after a tough break. Here’s how to get help making your auto loan payments.
Call Your Lender As Soon As You See The Problem
Many people think that if you call your lender and tell them you’re having trouble making payments, they’ll just take your car away. Nothing could be further from the truth; Defaulting on a loan is both bad for you and bad for them, so if there’s an issue coming up fast, call your lender and talk to them about your options. They may offer repayment plans, deferments or other tools to give you a little breathing room and get your car paid properly.
Rework Your Budget
Many setbacks change your financial situation, but you probably won’t know the extent of it until you’ve sat down and worked out your bills. Once you’ve talked to your lender about options, sit down with your current income and your current costs and work out where your money goes. In many cases, once we set aside our initial panic, the situation isn’t nearly as bad as it looks, and you’ll just have to give up your morning coffee or cook at home instead of eating out.
Look Carefully For Potential Sources Of Cash
Before doing anything with your money, remember the old turn of phrase “Robbing Peter to pay Paul.” You shouldn’t defer your mortgage to pay for your car, or fall behind on other bills just to keep your car. That said, you’ve got options when it comes to paying for your car; look into, for example, deducting from your retirement account to make a payment while you work through your financial situation. No matter where you borrow, though, keep that in mind that above adage; don’t dig yourself in further, financially.
Refinance Your Loan
Finally, long-term, the best thing to do will be to refinance your auto loan. Most lenders will allow you to do so fairly simply, lowering your overall monthly payment.
Refinancing your auto loan with an eye towards lowering your payments is relatively easy to do. Essentially, you’re replacing your current loan with a new loan, with the new loan changing the terms. As a rule, the best way to lower your monthly payments is to extend the term of your loan, or how long it goes for; the longer your term, the lower the payment.
Before refinancing, keep the age of your car in mind. With each year that passes, your car will be worth less as a trade-in. This won’t matter as much if you’ve chosen a car that can hold its value, and the overall improvements in reliability and quality make any recent car more valuable. But keep an eye both on the present and keeping your car, and on the future, when you inevitably turn it in.
No matter what your situation, remember this: Your lender wants you to pay your bills on time, and with a little work and some planning, you won’t have to fall behind.