If you can’t make your car payment, contact the lender to work out an arrangement, sell the car to transfer the title to a new owner or voluntarily relinquish the vehicle and take the credit hit. Contacting a lender should be the first step, as many lenders are willing to work out payment arrangements.Continue Reading
Lenders often have multiple options for handling missed car payments. They might offer to give an extension on when the full car payment is due or allow the individual to make smaller payments over a period of time until she catches up with the past-due payments. This ensures the lender still gets paid for the car loan and the car owner doesn’t lose her car.
When speaking with the lender, give as many details as possible. Don’t just say the bill can’t be paid, but actually tell the lender why. The reason might be losing a job, a cut in hours or pay or some emergency expense. With this information, the lender is more able come up with a reasonable alternative based on the financial situation. If refinancing isn’t an option, the lender might work with the vehicle owner to adjust payments for a time.
Trying to sell the car for at least enough money to cover the cost of the loan is another option. Contact the lender to find out if this is allowable and what is required to transfer the title. If repossession is the only option, some money is saved by voluntarily surrendering it. This means to turn over the car to the dealer. This option still affects the borrower's credit score, but there are no additional physical repossession fees.Learn more about Household Budgets