Can You Extend a Car Loan in Canada? Your Questions Answered

Car loans are typically a fixed amount with a fixed repayment for a fixed period of time. You can change that if you need to though. One option is to extend the car loan.

It isn’t always the best option or the most efficient but can be done if you need to.

If your lender agrees.

Extending a Car Loan

A car loan is one of the more predictable financial commitments we make. We know how much we will be paying each month and we know exactly how many months we’ll be paying it.

That can all be changed if you need it to as long as you discuss it with your lender beforehand.

Circumstances change, fortunes rise and fall and sometimes we need a little flexibility in our lives. Many lenders are willing to work with you on this. As long as you discuss it with the lender ahead of time.

As you entered a contract, the lender doesn’t have to agree to a loan extension. However, many will agree it, especially if you’re trying to avoid financial issues. The lender would much prefer you complete the loan successfully and many are willing to work with you to achieve that.

It's Good to Talk to Your Lender

The key to getting a lender to agree to a loan extension is to discuss it with them ahead of time. This is especially true if you’re having trouble repaying the loan.

Lenders are far more willing to be flexible if you discuss things with them ahead of time. Get ahead of the situation and they can be surprisingly flexible. Leave it too late, until you have missed a payment, and they are much less flexible.

Alternatives to Car Loan Extensions

If you need to lower your monthly payments, an extension isn’t your only option. There are other tools at your disposal to help you manage the loan.

Tools like:

• Car loan Payment Holidays: Many lenders will allow a payment holiday during a car loan if you request one. They are often between 1-6 months and interest will still accrue over that time but your payments will be suspended.

• Transfer the Car Loan: If you have a family member willing to take on the loan, you can often transfer the loan. Again, the lender will have to agree but as long as the person passes the loan criteria, it is possible.

• Refinance the Loan: Depending on how far into your loan you are, you may be able to refinance it. You could lower the monthly payment or raise a little cash to pay off other debt, depending on your needs.

• Sell the Car: This is obviously the move of last resort but it is an option. Sell the car, settle the loan and buy something cheaper with any money you have left over.

If you’re in danger of defaulting on your car loan, talk to your lender before it happens. Lenders have lots of options at their disposal to help borrowers who need a little help so don’t be afraid to ask.

People from all walks of life can find themselves in difficulty through no fault of their own. Everyone knows that and nobody judges it.

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