Don’t Ignore The Situation
Instead of avoiding the problem when you can’t pay, you have to face it head on. Call your lender as soon as you know you will be having financial difficulties affording your car. Let the lender know why you are experiencing financial hardships (loss of job, etc…) and if you have an indication of when things will be back on track. The lender will want to be assured you have every intention of holding up you end of the agreement to pay and will likely give you some options for your situation. One idea is they will allow you to defer your payments. Instead of making a few of your regular monthly payments, they may move them to the end of your loan and give you some time to catch up. You will still be responsible for paying the deferred payments but not during the deferment period.

Refinance

Another option is refinance your loan balance and get a lower interest rate. This will help to lower your monthly payments each month to something that might be more manageable. In refinancing, you may also be able to extend the time length of your loan which will also help reduce monthly payments. Your lender should be able to discuss all of your options with you based on your financial abilities during the hardship.

Make The Sale

If none of these options will work for you, or you feel as though the vehicle you have costs you too much overall, consider selling the car – but only do so if you can be confident you can sell it for more money than you owe on the existing loan balance. If you are pretty certain that your personal finances will remain unchanged for several more months, selling the vehicle may be your best bet. Check online at the blue book values of your car and what other similar used vehicles are going for in your area. When you sell the car, pay off the balance of the loan as soon as possible to clear the debt. Shop for another vehicle that will save you money in maintenance and operating costs.

Lenders do not want to repossess. They would much rather keep a customer and work with you during financial difficulties as long as you work with them. If you avoid the obvious difficulties in paying your car note, a repossession will ruin your credit score, making it even more difficult to handle your personal finances in years to come.

Can’t Afford Your Car Note? Prevent Repossession Now was created by and is property of American Consumer News.

There are several reasons why consumers get themselves in debt over a car.

Wanting a Car versus Needing a Car – Many consumers do need a car to survive. They need to get to work, to the store, and transport their families. However, there are many people who have access to reliable public transportation, car pools, and other resources and prices should be compared to the costs of owning one or more cars.

You are What You Drive – People often make the mistake of buying something that is more than they can reasonably afford in order to be perceived in a certain light. Today’s car commercials portray cars as a status symbol and many consumers are fooled into that line of thinking.

Only Considering the Monthly Payment – Many consumers do not take a look at the whole picture when financing a vehicle. They tend to look at the monthly payment and dismiss the other costs involved in vehicle ownership.

Suckered at the Dealership – Salesman have a knack for getting consumers to buy cars and sometimes they can get them to buy cars for too much money. Without being able to negotiate a good deal, you run the risk of being taken for a ride in more ways than one.

Lender Approval Means Affordability – Just because someone is willing to finance a certain amount for a new vehicle does not necessarily mean you can afford that much on a monthly basis. Some lenders even count on that scenario so they can tack on the extra fees associated with missing a payment, paying late, and even defaulting on the loan.

So what do you do if you realize you can no longer afford to keep your car or that you have simply paid too much?

Sell It – If you have equity in your car and it is still in great condition, you could possibly sell it or trade it in for a less expensive, more affordable vehicle.

Refinance – If the car you financed was new and you have been keeping up with payments, your lender may be willing to refinance your loan and extend the terms for a longer period.

Reconfigure your Budget – Probably one of the best and easiest solutions is to cut back on some of your expenses so you can better afford your payment. Cut off unused or unnecessary utilities and use the extra money towards your car note until it is paid off.

Repossession – Usually the last resort, repossession of your car will annihilate your credit and you will still be responsible for paying any monies remaining from the loan balance and the amount of money the car sells for if auctioned. There may also be fees associated with the repossession and costs from selling it at auction.

Whatever the reason you find yourself in debt because of your car, don’t let the situation go ignored or you will wind up in a worse situation. Next time you go car shopping, be prepared and stick to your guns. Know what you can afford to pay and don’t let anyone tell you otherwise.

Your Vehicle May Be Breaking Your Bank was created by and is property of American Consumer News.