If you start struggling with your car loan repayments, it’s better to deal with the problem sooner rather than later. Whether you’ve hit a temporary set-back, or a more permanent one, or even if you are completely in over your head – this is the time to deal with the problem.
A temporary problem
Everyone goes through temporary money problems. Whether you’ve just had to fork out for a big medical bill, or you’ve had to replace the boiler at home, or you’ve just hit a rough patch, it can affect your finances for the worse.
If this has happened to you, and you know you will get back on track in a month or so, it’s a good idea to speak to your lender to find out your options. Your lender may give you a deferral for a certain period of time, you may be able to renegotiate a longer loan with smaller monthly repayments, or you may even be able to negotiate a lower interest rate on your car loan.
A more permanent problem
If your financial issues are more permanent, you may need to work on a more permanent solution. If you have good credit, you may be able to refinance your car loan so that it’s more affordable. That may mean a longer loan with more affordable repayments, or a loan with a lower interest rate. You may be able to refinance with poor credit, but you could end up paying more in interest.
If you have two cars, think about whether you actually need both of them. If you only have one car, think about whether you can get by without it – even if it’s only for a year or so until you get back on your feet. If you really need your car, you also have the option of trading it in for something cheaper.
You’re in over your head
If you’re behind on your car loan repayments, and on any other credit repayments, you need to deal with it now, before you are charged even more in late fees, and you find yourself in even deeper debt. You may want to look into debt consolidation options, or speak to a professional financial adviser.