Seven Ways to Protect Yourself from Car Loan Payment Mishaps
By Angela Sanders Sunday, January 12, 2014, 05:45 AM EST
Car loans can be difficult and tricky to stay on top of. These financial products can become burdensome if you fall behind in your regular payment schedule, which is the last thing that you want to do. However, even in such situations, there is usually still a lot that you can do to protect yourself. Here are seven ways to protect yourself from car loan payment mishaps.
Talking to the Dealer Helps
If you feel you're about to fall behind on your car payments, just be direct and talk to your dealer. Explain your situation and let your dealer know that you want to stay with the same make, but you seek to trade it in for a less expensive model.
Think About Refinancing the Loan
Refinancing your loan is, essentially, extending it. This means getting a lower interest rate than the one you are currently stuck with. Be prepared to provide your before-tax income, current interest rate and current monthly payment. Should you happen to owe more on your vehicle than what it's worth, you will not be able to refinance the loan.
How About Selling the Car Yourself?
To protect yourself from a mishap, you can always sell the vehicle and pay off the loan. It's a good idea to attempt to sell it for the balance owed. What to do about transportation? There's always public transit, or you can buy a used car instead.
Get Somebody Else to Assume the Payments
If you’re stuck with an auto loan that you don’t want, you could persuade another individual to take over the loan. You could find somebody who'd be willing to take the car off your hands and assume your remaining payments. The lender still has to label that somebody creditworthy before he can assume your payments, assuming you can find a person willing to do this. Try to advertise in order to attract a person willing to assume your payments.
Seek Out Auto Finance Companies
Auto finance companies truly wish to work something out with you if you're in danger of falling behind your car loan payments. They want to prevent themselves from having to repossess your ride, which would just cost them money. Before contacting your lender, prepare yourself to be in a good negotiating position by calculating the value of your vehicle and what you can still pay.
Get the Due Date Pushed Back
You can still keep your car if you fall behind on payments if you can get the due date pushed back. Just talk to your lender and ask if the due date can be pushed back, so that you can come up with the money in time. Some lenders may allow you extra time, allowing you to avoid falling behind.
See About a Voluntary Repossession
If all else fails, you can investigate the possibility of a voluntary repossession by your lender. However, this option will show up on your credit report and result in a lower credit score - so this should really only be a last resort.
These are the seven ways in which you can protect yourself from car loan payment mishaps. Having a car is a nice privilege. It affords you much convenience and enjoyment, but if you have a loan, you have to be very responsible in making sure you pay on time, all the time. While falling behind on a loan is never appealing, there are various ways to get around that problem.