Can't Afford a Car Loan Anymore? Here's 6 Things You Can Do
Can't Afford a Car Loan Anymore? Here's 6 Things You Can Do
Posted on March 6, 2023
Several Canadians who had no fault of their own ended up in tough circumstances. Financial hardships are just one example of how the pandemic has wreaked havoc on every part of our life.
So what can you do if you are no longer able to afford a car loan?
Don't Panic
What comes first? Not to worry. At some point in their lives, everyone will need assistance, and assistance is accessible. If you find yourself unable to continue making vehicle loan payments, there are some other sensible options.
Don’t Miss a Payment
To never miss a payment is the second most crucial item to keep in mind. Your credit score will suffer as a result, and the lender's perspective of you will shift.
Both of which you don't want when you could later require your lender's assistance and your credit score.
We have some doable measures you can take to get out of the loan after you've resolved those two issues. Select the option that best fits your circumstances.
Managing a Car Loan You Can't Afford
Even though it may be unpleasant to be in this situation, there are plenty of solutions available to you if you find yourself no longer able to finance a car loan.
You can:
Use your funds or an emergency fund to pay off the loan: If you have savings or an emergency fund, you can use those resources. Although you might be temporarily exposed, it might stop you from defaulting on the loan.
Transfer the loan: If you know someone who could assume the loan in your place, you may be able to do so. That is a possibility, but the borrower would first need to receive approval from the lender and meet other requirements. Click here to find out more about transferring a car loan.
Negotiate lower payments with your lender: Most lenders are prepared to work with you to modify the loan so you can pay it off in full. Some companies will cut your monthly payments while others will grant payment holidays to assist in short-term circumstances.
Sell the car: If you have paid off enough of the debt to be able to afford something less expensive while paying the loan off, that could be a solution even if it might leave you without transportation.
Refinance the loan: If you are far along in your auto loan and have a lot of equity, or if your credit is poor, you may be able to refinance for a lower rate. This is a practical way to lower your payments while still making everyone pleased. keeping your vehicle as well For more information on refinancing auto loans, click here.
Voluntarily give up the car: If you have a secured auto loan, you can propose to give up the vehicle rather than making additional payments. This will have a negative effect on your credit score but may help you out of a tight spot.
We advise holding off on giving up the keys until you have tried all other options. It should only be used as a last resort and only if you have no other option.
Before you Take Action
Examine your finances in great detail before acting. A payment holiday or a loan from family may be all you need if your current circumstance is only temporary and will soon cease.
Discuss your circumstance with your lender to see what they can do if you believe it to be more permanent. Only if you don't need it or have another car should you think about selling yours.
We are equipped and ready to assist you if you require any more aid. Get in touch with us for further details!