Get an Auto Loan Extension in 4 Easy Steps

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January 27, 2012

If you are having problems with your credit or difficulties making payments on your debt, then a loan extension for your car may be a good option. This extension will increase the term of your loan so your monthly payment is decreased. In the long run you will pay more due to interest, but it can be a big help if you are in financial trouble.

  1. Your Budget: Before you go about requesting to have auto loan extended payments, you should determine the amount you can comfortably pay each month. Go through your finances and create a new budget showing what you can make for a monthly car payment. Keep in mind what you are already paying and how these two numbers compare.
  2. Proof of Financial Issues: You will need to show proof of your financial difficulty. This may be in the form of a divorce or unemployment. You want to stress how your finances are not stable and making your monthly payments is going to be a problem. Presenting this proof in facts and figures is the best, and an options report can be a good way to show this. You can collect together all of your bills and show your new budget and how the bills correspond.
  3. Application: You will need to submit an application through a loan modification company. To defer an auto loan will take time and you need to take this into account when using a loan modification company. If your application is accepted, then it will take some time for the documents to go through, the company will negotiate with the banks and more. Normally this process takes from 3 to 5 weeks.
  4. Contact the Lender: You can contact the lender yourself about your difficulties if you do not want to use a modification company. You can find the correct contact phone number on your monthly statement. Either use the phone or set up a meeting in person. Remember to have a pen and paper in hand and write everything down. You want to request an extension for the time you are expecting to have problems making the payments or ask if there are any other options available.

What to Expect

You can expect to have one of three things occur; your interest rate be reduced, an extension on the term of the loan, or a different type of loan. You also can get a combination of these 3. If you have proof of financial difficulties, then a lender will make a modification on your loan because the cost is much lower than if you would default on the loan. Be aware if they do not accept your application, then they may repossess your car to make up for losses.

How Modification Affects Your Credit

Loan modification does not negatively affect your credit. In fact, if you opt not to modify your loan and then miss some payments, then this will negatively affect your credit. Loan modification makes it possible for you to make your monthly payments. As long as you make those payments on time each month your credit will improve.

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