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From the Experts at Credit.com

What To Do If You Can’t Make Your Car Payments

by Gerri Detweiler

What to Do If You Can't Make Your Car Payments

If you find yourself unable to keep up with your vehicle loan payments, investigate the following options as soon as possible to avoid a repossession of your vehicle:

Modify Your Auto Loan

Talk with your lender to find out whether you can modify your vehicle loan. Some lenders will allow you to make lower payments for a short period of time, or even skip a payment or two, and add the deferred amount to the end of your loan. This option may be available to someone experiencing temporary financial problems, but it is not wise if your money troubles are ongoing. It’s important to discuss this option with your lender before you miss a payment.

Refinance Your Vehicle Loan

If you have strong credit, you may be able to refinance your loan and lower your payments, either by taking out a longer loan or by lowering your interest rate. The former can be a costly option but may be better than other alternatives. Your current lender may be willing to refinance your loan or you may have to shop around for a new lender. Not sure what your current score is? Find out using Credit.com’s Free Credit Report Card.

Let Someone Assume Your Loan

If you have a good car loan with a low interest rate, or even a good lease, a buyer may be happy to take over your payments. Talk with your lender – not all car loans and leases are assumable. If yours is, the buyer will likely have to meet credit and income qualifications in order to officially take over the loan or lease.

Sell Your Vehicle

Advertise your vehicle for sale and see if you sell it for enough money to pay off your current loan. If not, you will have to come up with the difference between what you sell the car for and what you owe in order to transfer the title of the vehicle to the new owner.

Turn The Keys In

Sometimes walking away from your vehicle (known as a “voluntary repossession”) is the only available option. However, keep in mind that in most states the lender can still pursue you for the “deficiency” – the difference between what you owe and what the car sells for at auction. If you are thinking of going this route, try to work out something with the lender to minimize balance you’ll still owe.

Let Your Car Be Repossessed

If you fall behind on your loan, your vehicle may be repossessed. Every state has its own laws that cover vehicle repossession. In most cases, your vehicle can’t be “repo’d” if it is locked in your garage, or even if you protest. However, if you are at risk of losing your car in a repossession, it’s a good idea to remove anything of value that belongs to you from the vehicle and to talk with an attorney so you know your rights should it be taken.

Repossession is one of the most costly options for dealing with a car you can’t afford, as the cost of taking back the vehicle and selling it may be added to your loan balance.

File for Bankruptcy

Bankruptcy can sometimes stop your vehicle from being repossessed. Or, it may wipe out a deficiency debt you owe on a car that’s already been repossessed or given back to the lender. Consult with a bankruptcy attorney to explore your options.

To learn more about managing car loans and how to find the best loan for your situation, read more from our experts by visiting our Loans Learning Center.



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  • Meet Our Expert

    gerri_detweiler GravatarGerri Detweiler is Credit.com's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.
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