Transportation is as vital for most people as shelter and food. However, falling behind on your car payments could also mean you end up in a vicious cycle of having no money to pay for your beloved car, losing it, and then having no means to get it back.
No matter how much you want to avoid this cycle, sometimes skipping one monthly payment due to financial restraints is inevitable.
Fortunately, there are certain ways to soften the blow. Here are some of them.
Consider a Car Refinance
In a nutshell, refinancing refers to taking a new loan out to pay for your existing loan. So how does it make your situation any better? If you’re struggling to make your current monthly payments, you may want to look for an option that’s within your budget.
A good deal can help you get rid of the loan much more smoothly. However, the new lender will also keep your car as collateral. Hence, you may want to avoid going for an auto refinance if:
- The fee for the loan is too high
- The loan is almost paid off
- The car does not have more equity than it’s worth
Ask Your Current Lender to Skip a Car Payment
While refinancing is never a bad idea, you may want to speak to your existing lender first. Some lenders offer deferred payments to borrowers. This means that your lender will delay your payment until the end of the loan. However, different lenders have varying policies, and some may even require you to pay the interest amount regardless of the deferred payments.
Change Your Payment Due Date
If your lender allows, you can also get the date pushed back a few days or weeks to come up with the money. However, remember that it may impact the total amount of interest you pay at the end of the loan.
What’s the Worst That Could Happen?
If a car refinance, negotiations with your current lender, or pushing dates back do not work, then you may be at the risk of car repossession. Remember, you must consider all the options available at your disposal before reaching the point where repossession becomes inevitable. In the end, falling back on payments or failing to pay despite skipping a payment or two may leave a negative mark on your credit reports.