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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 decisions by offering financial calculators and interactive tools, publishing original and objective content. This allows you to conduct research and compare data for free to help you make informed financial decisions. Bankrate has agreements with issuers such as, 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 compensate us. This compensation may impact how and when products are featured on the site, such as, for example, the order in which they may be listed within the categories of listing and other categories, unless prohibited by law. This applies to our loan products, such as mortgages and home equity and other products for home loans. This compensation, however, does affect the content we publish or the reviews that you read on this site. We do not include the universe of companies or financial offers that may be available to you. Westend61/Getty Images

4 minutes 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 wrote about loans, home equity and debt management in his writing. The article was edited 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 gain confidence to take control of their finances with precise, well-studied and well-informed information that breaks down complicated topics into bite-sized pieces. The Bankrate guarantee

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You have money questions. Bankrate has answers. Our experts have been helping you manage your finances for more than four decades. We continually strive to provide our readers with the professional advice and tools required to succeed throughout life’s financial journey. Bankrate adheres to strict standards , so you can trust that our information is trustworthy and precise. Our award-winning editors, reporters and editors create honest and accurate content to help you make the best financial decisions. The content created by our editorial team is factual, objective and uninfluenced from our advertising. We’re transparent about the ways we’re in a position to provide quality information, competitive rates and helpful tools to you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods andservices or when you click on certain hyperlinks on our website. So, this compensation can influence the manner, place and in what order products are listed and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other home loan products. Other factors, like our own website rules and whether the product is available in the area you reside in or is within your self-selected credit score range may also influence the manner in which products appear on this website. Although we try to offer the most diverse selection of products, Bankrate does not include the details of each financial or credit item or service. A crucial aspect of a successful budget is fitting all of your monthly expenses within your budget. As part of your routine review of your budget, you may find yourself in a situation that you think you’re not able to afford your car expenses. If this is the case, you have several options to find relief. Each option come with their own advantages and disadvantages, and you’ll want to review them carefully to see which option might be right for you. Contact the dealership to request an offer to trade in your vehicle. The first step that you can take is to contact your dealership to see if they can swap your car for a more affordable version. This could be easier to work out if you originally bought your car through the dealership and the loan is funded through it. That might make the dealership more responsive in making arrangements with you. But even if that is not the case, it’s worth calling the dealer to see the options at your disposal. Depending on the price difference between your current and new vehicles, as well as the terms and conditions, you might be in a position to save a substantial amount of money by purchasing purchase a cheaper vehicle. Be aware that the current situation could make selling your vehicle slightly more difficult. The prices of used cars have climbed significantly over the last few years ago. Also, depending on the kind of car you’re trading in and what type of car you’re looking to get instead this could prove more challenging than expected. Request loan change Another possibility that you have if you can’t make the monthly car payment, is to ask for the loan modification . With a loan modification, you work in conjunction with your lender to alter the conditions of the loan. This may include decreasing the interest rate, delaying payments for a period or altering the due date to align more closely with your timetable. A loan modification could also extend the duration of your current loan. This will usually lower your monthly payments, but you will pay more interest over the duration of the loan. It is important to be cautious and ensure that the numbers are in your favor you prior to committing to any changes. Refinance your car loan When your lender does not want to modify your loan You can choose to . It is possible to shop around and apply for prequalification with a variety of lenders to determine the most favorable rates and terms. If you are a member of an institution like a local credit union or bank You may be able to obtain better rates as you already have a history with them. Before you refinance your auto loan, find out whether you qualify. Even the case that you have a bad credit score, you might be eligible to if you can pay off your car loan in a short time or have increased the credit rating of your. Also, check to see the fees that are associated with refinancing your auto loan. There are fees that include fees for early termination and transaction fee and state registration fees. the cost of auto insurance and late payment charges. Take a look at the following as a suitable method to refinance your vehicle: Decide if refinancing is the best option for you financially. Check the current loan. Review the credit rating. Estimate the value of your car. Shop around for the best refinancing rates. Calculate how much you’d save when refinancing. Complete your paperwork. Sell privately and then buy within your budget. If you aren’t able to pay for your car right now, another possibility to think about is selling your vehicle privately, and later buy a new car that is more within your current budget. There are more steps involved with this, but it’s nevertheless feasible. The current market is particularly favorable for the sale of a secondhand vehicle, with prices substantially higher than previous years, so you may get the best price. Of course, the other side of a hot marketplace for used cars is that it might be harder to locate a replacement car that fits your budget. It is important to research the market and understand how much it will cost to buy a new vehicle. That will give you an idea of how much you’ll save by switching vehicles and if it will be worth it to you. Get help from your family and friends assistance. A last resort could be to ask your family and friends for help. It could or might not be the right choice for you depending on your relationship with relatives and friends, as well as their own financial situations. But if you’re in a situation where you can’t afford the car loan, talking to those who are close to you may be a good avenue to explore. Remember, too, that the help of family and friends doesn’t have to need to be financial. Although it would be wonderful to have a wealthy uncle who would pay off your loan quickly, the majority people aren’t in that kind of situation. In addition to financial aid the family members and friends of yours might be looking to sell their used vehicle or know someone who is. Those kinds of connections might assist you in saving money. Next steps When you’re in a position that you are unable to pay your car payment, acknowledging and taking stock of your finances is the most important step. In the event of ignoring the issue, or even worse, missing payments on your car loan can cause serious problems with your overall financial situation. Once you’ve identified the issue you should look into the options. Talk to your lender first to determine whether they’re willing to alter your loan. They don’t want to modify existing loans however, they aren’t keen on repossessing cars. Be clear about why a modification is necessary to continue making payments. Based on your personal situation and credit score, you may be eligible to refinance your loan and save some cash. Make sure you research the fees associated with refinancing and read the terms of the loan contract before making any decision. Commonly asked questions What should I do if I’m not able to afford the car payment? If you’re unable to make payments on your car loan and you are in a position to pay it, now is the best time to take action. Explore your options below: reach for your lender to see if you can defer payments, look into getting a new loan, trade in your car or sell it or surrender your car voluntarily. What are the costs associated with refinancing an auto loan? Costs for refinancing an existing auto loan may include an early termination fee and transaction costs, state registration fees, auto insurance costs late payment fees, as well as an upfront cash payment. Is it possible to refinance the car loan even if you have a low credit score? Yes, you may be qualified to refinance a loan even if you have a bad credit score. Find out more

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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 home equity, loans and debt management in his work. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are committed to helping readers to control their finances through providing clear, well-researched details that cut complicated topics into digestible pieces.

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