With all the uncertainty floating around in light of the coronavirus, or COVID-19, situation, the last thing you need to worry about is whether or not you can continue to afford your car loan payment. If you’re worried about missing a payment, and don’t want to let your vehicle go, you still have options.
1. Communicate With Your Lender
If you’re having trouble keeping up with your payment, it might be tempting to just let some things slide for a little while. This isn’t a good way to reduce payment stress, and can hurt you more in the long run. Instead of letting things fall through, reach out to your lender.
In most situations, your lender wants you to successfully finish your auto loan just as much as you do. When you can’t make your car loan payment, it costs them time and money, too. So, rather than letting you default and repossessing your vehicle, many lenders are willing to work with borrowers that need a helping hand, especially in these uncertain times.
One option your lender may be able to offer could be deferment, where they push back or postpone your payment. If this isn’t available, your lender may be able to move your due date to something that makes more sense for you.
No matter the relief your lender can offer you, if you’re having trouble affording your loan payment, you won’t know until you try. Don’t be afraid to communicate with your lender.
2. Refinance Your Auto Loan
If your lender isn’t able to do anything to help you with your current car loan, another option may be refinancing. Refinancing means replacing your current auto loan contract with a new one that has a better interest rate and/or term. Generally, the only reason to refinance is to lower your monthly payment. You can do this in two ways: refinance with a lower interest rate, or refinance with a longer loan term.
When you refinance, you, your vehicle, and your loan all need to meet a lender's refinancing requirements. Typically, this means you must have had your car loan for at least one year or more, have a good or improved credit score, and are current on the loan. Your vehicle also generally needs to have equity, be less than 10 years old, and have fewer than 100,000 miles. Additionally, the loan amount must be within the lender’s qualified range.
Refinancing isn’t an option for everyone, and if you’re having trouble qualifying for this option, you still have another option that could help: trading in your car.
3. Trade In for a More Affordable Car
When the going gets tough and you’re having trouble affording your auto loan, you may have the most luck trading in your vehicle for a more affordable make and model.
If you have equity in your current car, you may be able to trade it in for a vehicle with a lower monthly payment. If you have negative equity, it may not stop you from trading in your car, but doing this typically won’t help you save money, because if you roll negative equity into a new loan you essentially end up paying on two loans at the same time.
In order to get the most you can out of your trade-in, make sure to clean your vehicle inside and out. Take care of any minor damage, too, as long as it's cost-effective. Be sure to go to an online valuation site such as Kelley Blue Book or NADAguides to get an estimate of your car’s value before you take it to a dealership. This gives you a starting point for negotiations.
Also, make sure you take plenty of photos in case a dealer wants to work online or over the phone with you.
Don’t Drive Far, Use Drivers Lane
Whether you’re looking for a dealership to take your trade-in, or just need to work with someone that understands unique credit situations, Drivers Lane has got you covered.
We're teamed up with a nationwide network of special finance dealers that have the lending resources available to help people in challenging credit situations. Before you run out and check every dealership in your area, stay put and let us do the searching for you. We want to match you to a dealer that can help. To get the process started, simply fill out our easy, free, and fast auto loan request form.