Getting your first car is undeniably one of the most fulfilling experiences in life. However, keeping up with auto loan payments can sometimes become a hassle, given how the economic environment keeps changing. It’s possible you may not be in the same place as you were in a few months back, and that’s alright.
Whether it was a hefty medical bill that took a toll on your wallet or the loss of a well-paying job, if you’re falling behind your auto loan payments, there are ways to deal with it. While a car refinance is a great option to explore in these circumstances, you may want to speak to your lender and negotiate a way out before making a leap.
Explain the Situation to Your Lender
Start by explaining what financial hardships you're facing and if you're lucky, your lender may offer many choices based on the need of the hour. It's also a portrayal of good faith on your part as your lender can see you're actively trying to repay your debt. Here are some solutions you can discuss with your lender.
Solution #1: Request to change your payment due date
If your circumstances are such that your current workplace pays you later than usual, you can request your lender to adjust the monthly payment date until matters are resolved at work. However, it may have some impact on the interest rate because it may be subject to change if there’s an adjustment in the payment date.
Solution #2: Request for an extension
If your lender is not able to adjust your monthly payment date due to any reasons, don’t go for a car refinance yet. You should still consider bringing other options to the table before moving on, such as a payment extension.
A payment extension is like a brief break from payments you can take if you think your hardship will last longer than expected. Again, your lender may either give you a complete extension or tell you to pay just the interest every month until you’re back on your feet.
However, there is a downside to this option too. If you are granted an extension, the total interest and all the accumulating payments may be hard to deal with at the end of your term.
Solution #3: Finally, Go For a Car Refinance
If you don’t see any potential solutions working out with your current lender, consider going for a car refinance. It will allow you to explore the market for lower interest rates and increased payment flexibility. You may also come across a lender who can help adjust your loan terms to make them suit your current circumstances better.