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4 minutes read. Published April 19, 2022

Dan Miller Written 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 home equity, loans and managing debt in his work. 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 dedicated to helping readers gain confidence to take control of their finances through providing clear, well-researched information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate promises

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There are money-related questions. Bankrate can help. Our experts have helped you understand your finances for over four years. We continually strive to give our customers the right advice and tools needed to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is truthful and reliable. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the best financial decisions. The content created by our editorial team is objective, factual and uninfluenced by our advertisers. We’re open about how we are capable of bringing high-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 receive compensation for the placement of sponsored products or services, or through you clicking certain hyperlinks on our website. So, this compensation can affect the way, location and in what order items appear in 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, such as our own rules for our website and whether a product is offered in your region or within your own personal credit score may also influence how and where products appear on this website. While we strive to provide the most diverse selection of products, Bankrate does not include the details of every financial or credit product or service. One of the most important aspects of creating a successful budget is fitting every single expense within your income. As part of your routine review of your budget, you may be in a position in which you feel you’re not able to afford your car payments. If this is the case you’ve got a few options to find relief. Each of these options come with their own pros and cons, and it is important to study them carefully to decide which is the best for you. Contact the dealership to request an offer to trade in your vehicle. The first step that you can do is to call your dealer and see if you can swap your car to a less expensive model. This might be easier to determine if you originally bought your vehicle through a dealership and your loan is funded through it. This could make the dealer more receptive to discussing the details with you. Even if this is not the case, it’s worth calling the dealer to find out the options available to you. Based on the cost difference between your new and current cars, and the term and , you may be capable of saving a substantial quantity of dollars by changing choosing a less expensive car. Be aware that current prices situation could make selling your vehicle somewhat more difficult. The prices of used cars have dramatically increased from the last few years ago. So, depending on what kind of car you are trading in and what kind of car you’re looking to get instead this could prove more challenging than you expected. Request a loan modification Another option that you have if you can’t make the monthly car payment, is to ask for an . Through the option of a loan modification, you work with the lender to change the terms of your loan. This could include lowering the interest rate, delaying payments for a period or changing your payment’s due date so that it is more closely with your timetable. A loan modification could also extend the duration of your current loan. This usually reduces your monthly payments, but you’ll pay more interest over the course of your loan. You should be careful and make sure that the numbers are in your favor you prior to committing to any modifications. Refinance your auto loan If your lender is not willing to alter the terms of your loan You also have the option of refinancing . It is possible to shop around and prequalify with several lenders to get the best rate and terms. If you are a member of the local bank or credit union, you might be able to find better rates there as you have a long-standing relationship with them. Before refinancing your auto loan, find out whether you’re eligible. Even even if you have a low credit score, you may be eligible if you are able to pay off your auto loan quickly or have increased you credit scores. Also, make sure to determine the fees related to refinancing an auto loan. Certain fees are fees for early termination and transaction fee, state registration fees, auto insurance cost and late payment fee. Think about the following as a good method to refinance your vehicle: Decide if refinancing is the best option for you financially. Review your existing loan. Examine your credit score. Estimate the value of your vehicle. Compare refinancing rates. Find out how much you could save when refinancing. Make sure you have your paperwork in order. Sell privately and buy within your budget If you can’t afford your car payments right now, another possibility to consider is to sell your car privately and purchase a different car that is more compatible with your budget. There are additional steps to take in , but it is still definitely doable. The current market is particularly favorable for the sale of a secondhand vehicle, with prices substantially higher than previous years and you could be able to command an excellent price. Of course, the other aspect of a booming marketplace for used cars is that it might be more challenging to find the right replacement car to fit your budget. Make sure to research the market thoroughly and know the price to purchase your new vehicle. That will provide you with an idea of how much you’ll save by switching cars and whether it will be worth the cost to you. Ask friends and family for assistance. A last resort could be to ask relatives and friends for assistance. This could or might be the best option for you, based on your relationship with family and friends, as well as their own financial situations. However, if you’re in a circumstance where you’re unable to pay the car loan, talking with the people closest to you might be an option to consider. Remember, too, that the help of relatives and friends doesn’t necessarily need to be financial. While it’s great if you had a rich uncle who could take care of your loan in a matter of minutes, the majority of us are not in that type of scenario. In addition to financial assistance, your friends and family might be looking to sell their used vehicle or know someone who has. Those kinds of connections might help you save money. The next steps to take when you’re in a situation that you are unable to pay your car loan, being aware and assessing your financial situation is the first step. Ignoring the situation or, more importantly, not paying for your vehicle loan will cause major problems with your overall financial situation. Once you’ve identified the issue, it’s time to explore your options. Contact your lender first to determine whether they are willing to amend your loan. The lenders don’t like changing existing loans, but they also aren’t keen on repossessing cars. Make your case as to why it is important to modify your loan for you to keep making payments. Based on your personal situation as well as your credit rating, you might be eligible to refinance your loan and possibly save money. Be sure to research the fees related to refinancing and understand the conditions of the loan contract before taking any action. Most frequently asked questions What should I do if I’m not able to pay for my car? If you are unable to make payments on your car loan it’s the right time to act. Consider these options: Reach out to your lender to determine if you are able to defer payments, consider the possibility of obtaining a new loan, sell your car, or trade it in or give up your car voluntarily. What are the fees for refinancing an automobile loan? Costs for refinancing an auto loan might include an early termination charge and transactions fees and state registration fees. They also include auto insurance cost late payment charges and an up front cash payment. Are there ways to refinance a car loan with a poor credit score? Yes, you could be qualified for a refinance loan even if you have a bad 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 wrote about loans as well as home equity as well as 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 late 2021. They are committed to helping readers feel confident to take control of their finances with concise, well-researched and well-documented details that cut complex subjects into bite-sized pieces.

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