Has your car loan gotten out of control? Most people buying a car are initially able to make the payments. However, problems can occur later creating automobile debt. An unforeseen reduction in disposable income may put them behind on payments and leave them seeking consumer automobile debt help for a car loan they can no longer afford.
Effects of a Reduction in Disposable Income
Even when the economy appears strong, individual circumstances can change for the worse. An employer facing financial hardship may cut hours or lay off staff, causing employees their own financial hardships. In difficult financial times, automobile repossessions increase. While some lenders offer help for missed car loan payments , not all lenders are so accommodating when good customers face hard times.
How to Get out of a Car Loan I Can’t Afford?
As soon as you realize you will be unable to make your car loan payment, take appropriate steps before automobile debt help become urgent. The first three things to do are:
- Contact the lender before you miss the first car payment. Inquire about available options. Before you hang up with the lender, ask for the information in writing.
- Run the numbers before you decide the best option for your circumstances. Find out how much you owe on the car and research the Kelly Blue Book for your car’s value. Sign up for a free Experian account to keep tabs on your credit score.
- Conduct an analysis of all your financial resources. Will refinancing the loan or getting a deferral result in payments that fit your budget? Are your present circumstances temporary or recurring? If the latter, you may want to consider selling your car.
How to Get Rid of My Car Debt Fast?
The easiest way to get rid of car debt quickly is to make extra payments. Follow this process to pay off your loan as quickly as possible.
- Arrange to pay extra payments on your loan whenever financially possible.
- Make lump sum payments using tax refunds, bonuses from work, or gifts you receive as cash.
- If you receive a raise at work or acquire a second source of income, use the extra money to pay off your loan.
- Consider selling your car and using the proceeds to purchase a cheaper but reliable car. This is not an option if you are upside down in your loan or the proceeds from a sale would leave you too little to purchase a reliable vehicle.
What Can I Do If I Owe More on My Car Than It’s Worth?
If you are upside down on your car loan (owe more than what it’s worth), think about how you can reverse the negative equity. You can do this several ways.
- Pay more than you are required each month based on what your budget allows.
- Keep your current vehicle until you reach positive equity. Trade it in when you are no longer upside down.
- Convert the negative equity into the cost of a new vehicle. This may result in higher monthly payments, but the negative balance will be paid in full.
In some cases, it may be more feasible to sell the vehicle. If your negative equity is high or you have missed payments, you might take a financial loss, but sometimes selling is best solution.
Can I Give My Car Back to the Lender?
If you are unable to afford your car payments, you can return it to the lender. Both the borrower and lender have car repossession rights. Think very carefully before doing this because you could still owe money on the loan. Do not make the mistake of thinking the lender will write off any deficiency balance—they will not. If the lender is unable to sell the car and cover the entire balance of the loan, you will still be responsible for any difference.
You will be able to work something out if you have a good lender. Unfortunately, many don’t have the necessary compassion to work with customers facing financial hardship.Not all lenders will reinstate the contract after repossession without payment in full of the entire balance.
Unfortunately, when you are unable to make your car payments, automobile debt help may only be possible with professional help navigating repossession laws. Getting a lender to stop the mortgage foreclosure process is easier than working to avoid automobile repossession. Quite often the time between repossession and sale is too short for the owner to make the arrangements to reclaim the vehicle. In fact, the consumer may never even receive notice the vehicle is in danger of repossession.
Immediate Automobile Debt Help
If you would like to understand your rights and your lender’s rights in car repossession, follow this link to our automobile debt pages. We will outline car repossession laws and help you understand the rules for repossessing a vehicle. If you need immediate automobile debt help or your car has already been repossessed, you can call 866-964-9644 for a free live consultation with an attorney.
Automobile Debt Statistics
Changes in the prices of vehicles have had major effects on both financing terms and payment. Some of the effects noted are shown below.
Vehicle loans have longer terms. More consumers financed car loans for terms of 73-84 months, up 24.9 percent from the same period in 2014. Terms for loans on used vehicles have similarly expanded. The average loan for a new vehicle increased from $27,612 to $28,711 during the first quarter of 2015. Monthly payments followed suit, rising from $474 to $485 in the same period. The percentage of leases in the new vehicle market also rose over the previous year. These statistics do not favor consumers; causing more consumers to find debt help related to car loans they cannot afford.
Finding a Reliable Solution to Repossession
The economy has caused an increase in the number of people with automobile debt for vehicle loans with high monthly payments. The higher price of a new vehicle is often burdensome. For many who live in areas without public transportation, a vehicle is a necessity, not a luxury. Contact the lender or a vetted expert immediately—don’t wait until you are in danger of repossession.
Credit Yogi proudly serves all 50 U.S states; we may be able to help you work out a compromise with the lender. If you have talked to other providers please Beware of Car Loan Modification Scams. Loan modifications should be overseen by an attorney licensed by the U.S. Bar Association or otherwise a vetted expert. These scams are discussed on the FTC website about motor vehicle repossessions and auto refinance scams.
Laws differ by state, but for a basic understanding see Florida and California state explanations of repossession law: Uniform Commercial Code in Florida: Secured Transactions and the same law for the state of California: Uniform Commercial Code in California: Secured Transactions. The state of Georgia displays the rules of car repossession in an easy to follow format: Official website for the state of Georgia: Department of Banking and Finance: Vehicle Repossession
If you would like a free consultation from an attorney or a non-profit credit counseling agency, Credit Yogi can help you. Call 866-964-9644 now. You’ll be happy you did. Our database includes over 160,000 professionals operating in every zip code in the United States. It’s 100% FREE and you never have to hire anyone. Ever.