What to do When You’re behind on Your Car Loan

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By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - January 12, 2018

Borrowers who find themselves behind on their auto loans can use these methods to avoid having their vehicle repossessed. Communication is key in this type of situation. The more you talk to your lender, the more likely you’ll be able to work around the situation.

Contact Your Lender

If a borrower realizes they won’t be able to pay their next monthly installment on time, the first thing they need to do is contact their lender.

Most lenders are willing to work with a borrower, especially if they contact them before the payment is due. The sooner someone acts, the better chance the borrower avoids repossession. Here are a few common actions a borrower could take:

  • A deferral or due date change – A borrower can ask the lender what their deferment policy is to see if they can get a brief payment extension. Most lenders are also willing to adjust payment dates for temporary financial issues, so think about what days would be best and talk to your lender.
  • Refinance the vehicle – If a borrower has an interest rate above six percent, they can save money by refinancing. Refinancing can reduce monthly payment costs by extending the loan term and scoring a lower interest rate.
  • Sell or trade in the vehicle – If a borrower’s financial issues stem from the vehicle, it may be a good idea to consider selling or trading it in. Having a more cost-friendly car may not be as luxurious, but it’ll save someone more money in the long run.

Don’t Wait too Long

Falling behind on car payments can happen. It’s important to contact your lender to determine the best course of action to avoid having your car repossessed.

If you find yourself looking for a vehicle, and aren’t sure where to start, CarsDirect wants to help. We have an extensive network of special finance dealers who can help people in challenging credit situations. Let us connect you with a local dealership. Get started by filling out our auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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