Miss a Car Payment? Your Plan of Action
Whether you have a new or used car, it's likely that you need to make payments on it depending on its age. Now, your car is how you get to and from work and how you function in your day to day life. So what happens if you suddenly find yourself out of money and can't afford to pay your bill? There's nothing more frightening than the prospect of being without your vehicle. It could significantly limit your ability to fix your finances as well, since you'd have no way to get to work.
Regardless of the reason why you find yourself without cash, there is a way to deal with it and keep your car at the same time. The key is to take prompt action and to recognize when your car is simply too expensive to keep.
The moment you realize you're going to miss a car payment, contact your lender. That has to be your first step. Otherwise, the lender won't know you're having a problem paying your bill and will instead assume you're trying to skip out on it.
They will listen to you. At the end of the day, they want their money more than "punishing" you or anything like that. They want to help so they get paid. It's simple, really. Be sure to ask how much you own on the car still. Comparing this number to the true market value of the car will let you know if it's a better idea to work out a different payment plan or to simply sell the car to pay it off and remove your debt.
If you find that you owe less on the car than what it's worth, you'll need to figure out a way to make your payments. The lender will want to know exactly why you can't make them at this point. You'll need to provide detailed financial information that reflects your current situation.
By talking your situation over with a lender, he or she may be able to offer you a deferred payment. This pushes off your payment for 30 days while you sort out your financial issues. Another option is a loan refinancing, which could lower your monthly payment and the interest rate on your car. Or, you could spread out your payments, making for very small monthly payments. The only drawback is the interest rate will go up.
By working with your lender, you ensure you keep your car for yourself and avoid repossession.