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What to do when you can’t afford your car payment Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering you interactive financial calculators and tools, publishing original and objective content. This allows you to conduct research and compare data for free — so that you can make informed financial decisions. Bankrate has agreements with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this website come from companies that pay us. This compensation can affect the way and where products appear on this site, including the order in which they appear in the listing categories and other categories, unless prohibited by law for our loan products, such as mortgages and home equity, and other products that lend money to homeowners. But this compensation does have no impact on the content we publish or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offerings that could be available to you. Westend61/Getty Images
4 min read Published April 19 2022.
Written by Dan Miller Written by Points and Miles Expert Contributor Dan Miller is a former contributing writer for Bankrate. Dan was a writer for Bankrate who covered loans as well as home equity and debt management in his writing. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to manage their finances by providing clear, well-researched facts that break down complex topics into manageable bites. The Bankrate promises
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We are compensated in exchange for the placement of sponsored products or services, or when you click on specific links on our website. This compensation could influence the manner, place and in what order products appear within listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, like our own proprietary website rules and whether the product is available within your region or within your personal credit score can also impact how and where products appear on this site. We strive to offer the most diverse selection of products, Bankrate does not include the details of each financial or credit item or service. An important part of the success of a budget is to fit all of your monthly expenses within your income. As part of your ongoing budget review, you might find yourself in a situation that you think you’re unable to pay for the car payment. If this is the case there are a variety of alternatives to help you get your finances back. Each of these options come with their own pros and cons, and it is important to study them carefully to decide which might be right for you. Contact the dealership to request trade. The first step that you can do is to contact your dealership to see if they can swap your car for a more affordable version. This might be easier to determine in the event that you bought the car from a dealer and the loan is funded by it. This could make the dealer more receptive to working things out with you. However, even if this isn’t the case, it’s worth calling the dealership to inquire about the options open to you. Based on the cost difference between your new and current cars, and the term and the length of time, you might be capable of saving a substantial amount of money by to buy a lower-cost vehicle. Be aware that current prices circumstances could make selling your car slightly more difficult. The prices of used cars have climbed significantly over what they were years ago. Also, depending on the type of vehicle you’re trading in and what kind of vehicle you’re hoping to purchase this could prove more challenging than expected. Request a loan modification Another option that is available if you’re unable to afford your car payment is to apply for a . Through a loan change, you work with the lender to modify the conditions of your loan. This could include decreasing your interest rate, delaying payments for a time or altering the due date so that it is better with your schedule. A loan modification can also extend the term of your existing loan. It will typically lower your monthly payments, but you will pay more in interest over the life of your loan. It is important to be cautious and make sure that the numbers are in your favor you before agreeing to any modifications. Refinance your auto loan If your lender is not willing to alter your loan You have the option to . You can shop around and apply for prequalification with a variety of lenders to get the best rates and conditions. If you have an account with an institution like a local bank or credit union it is possible to get better rates as you already have a history with them. Before you refinance your auto loan determine if you are eligible. Even even if you have a low credit score, you might be eligible if have the ability to pay off your car loan quickly or have increased your credit score. Be sure to check if there are any fees associated with refinancing an auto loan. Certain fees are the early termination fee and transaction fee, state registration fees, auto insurance cost and late payment charges. Take a look at the following as a good method to refinance your vehicle Consider refinancing as the best financial decision. Review the current loan. Examine your score on credit. Determine the worth of your vehicle. Compare refinancing rates. Find out how much you could save by refinancing. Make sure you have your paperwork in order. Sell privately and purchase within your budget. If can’t afford your car payments in the present, a different option to think about is to sell your vehicle privately, and later purchase a different car that is more compatible with your current budget. There are a few more steps in , but it is nevertheless feasible. The current market is particularly favorable for the sale of a secondhand car, as prices are significantly higher than previous years which means you might get the best price. Of course, the other downside to a highly-priced second-hand car marketplace is that it might be more challenging to find the right replacement car to fit your budget. It is important to research the market thoroughly and know how much it will cost to purchase your new car. That will provide you with an idea of the amount you’ll save when you switch vehicles and if it will be worth it for you. Ask friends and family for assistance. The last option could be to approach relatives and friends for assistance. This could or might not be a great option for you based on your relationship with relatives and friends, as well as their own financial situations. If you’re in a situation in which you are unable to afford your car payment, talking with those that are closest to you may be a viable option to consider. Keep in mind as well that help from relatives and friends doesn’t necessarily have to be financial. While it’s great if you had a rich uncle who would just pay off your loan immediately, most people aren’t in that kind of situation. However, in addition to financial assistance Your family and friends might be looking to sell a used car or know someone who has. Those kinds of connections might assist you in saving money. The next steps to take when you’re in a spot in which you’re unable to make car payments, recognizing and taking a look at your financial position is the most important step. If you ignore the situation, or even more serious, failing to pay on your car loan could cause major issues with your financial health overall. If you’ve discovered the issue then you need to look into the options. Call your lender first, and ask whether they’re willing to modify the terms of your loan. They don’t want to modify existing loans, but they also do not like repossessing vehicles. Make your case as to the need for a modification to ensure you continue to make payments. Based on your circumstances and credit score, you could be able to refinance a loan and potentially save money. Make sure you research the fees associated with refinancing and read the conditions of your loan agreement prior to taking any action. Commonly asked questions What should I do if I can’t pay for my car? If you’re unable to pay for your car loan and you are in a position to pay it, now is the time to take action. Review your options below: Reach for your lender, see if you can defer payments, think about taking out a new loan, sell your car, or sell it or surrender your vehicle in a voluntary manner. What are the fees that are associated with refinancing an auto loan? Fees associated with refinancing an auto loan may include an early termination fee as well as transactions fees, state registration fees, auto insurance costs, late payment fees as well as an upfront cash payment. Is it possible to refinance the car loan with a poor credit score? You may be qualified for a refinance loan even with a poor credit score. Find out more
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Authored by Points and Miles Expert Contributor Dan Miller is a former contributor to Bankrate. Dan was a writer for Bankrate who covered loans, home equity as well as debt-management in his writing. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers to manage their finances through providing precise, well-studied facts that break down otherwise complex topics into manageable bites.
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