If you’re having problems making payments on an auto loan or lease, contact your lender or servicer as soon as possible to ask what options are available to you.
If you’re experiencing financial difficulties, it may be difficult to know where to start, but there may be a number of options to help you address short or longer-term financial challenges. You also have rights and protections if you’re at risk of having your car or vehicle repossessed.
How to get your auto loan back on track:
1️⃣ Contact your lender or servicer as soon as possible.
As soon as you know you’re unable to make your monthly payment, contact your lender or servicer – whoever you make your payments to – to find out the options available to you, which may include affordable payment plans, changing your due date, or pausing your payments through forbearance.
2️⃣ Get the agreement in writing.
To avoid miscommunications, get the agreement with your lender or servicer in writing. You also want to ask how this new agreement would impact your credit report.
3️⃣ Refinance your auto loan.
You can also talk with different lenders about refinancing your existing loan to get a lower interest rate or to spread out your payments over more time. Keep in mind, though, a longer loan term may mean cheaper monthly payments but more interest over the life of your loan.
4️⃣ Sell your vehicle.
Another option is to sell your vehicle, but first, find out how much you owe on the auto loan and the approximate market value of your vehicle. If you owe less than the value of the vehicle, you can sell it and use the proceeds to pay off the loan. Check your auto loan contract to also see if you have a prepayment penalty for paying off early. In some cases, your lender may also be willing to buy back your vehicle.
