For most drivers, access to their car is paramount to their ability to work and earn an income. For this reason, an inability to make a required car loan payment causes a great deal of stress and uncertainty. However, there are steps you can take to ensure a potential missed payment does not derail your financial situation or jeopardize your financing terms.
Call Your Financing Company
The biggest mistake you can make once you realize you aren't able to make a required car payment is to avoid talking to your financing company. Most lenders appreciate upfront and honest communication from their loan recipients and may be willing to work with you until you can resume regular payments. If you choose not to talk to your lender about your current financial concerns, you miss out on the opportunity to appear responsible and proactive about the problem.
While explaining the problem with the upcoming payments, the lender will explain the options at your disposal. One of these options is deferment, which is essentially a time-out in the repayment of your car loan. Interest will continue to accrue, but you will not be at risk for repossession. Take a deep breath and make the call, as it can potentially diminish the long-term damage of missing a car payment.
Consider Your Current Budget
There is an underlying cause of missing your car payments, and it resides somewhere in your monthly budget. If you cannot make a car loan payment, that means you are overspending somewhere else. In some cases, the root cause is an unexpected expense like a medical bill or car repair. Other times, the issue is more widespread. Write out a detailed monthly budget and look at your spending habits over the past several months to determine where you can cut back in favor of creating a cushion of funds for future car payments.
Consider Refinancing Your Loan
There are benefits to refinancing your loan whether you are having trouble making payments or not. Look into your refinancing options both with your current lender and with other financing companies. The process of researching refinancing options will either ensure your current loan is the best you can get or alert you to better terms for which you may qualify. This research can start during the phone call made to your lender alerting them to your payment issues.
A missed car payment can initiate penalty fees or vehicle repossession. Take a proactive approach to the problem and work with your lender on the payment problem.
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