What to Do When You Can’t Make Your Car Payment

Life can sometimes throw unexpected financial challenges your way, and one of the most demanding situations is realizing you may not be able to make your car payment. Knowing what to do when you can’t make your car payment is necessary because ignoring the problem can lead to late fees, damage to your credit, or even repossession. Fortunately, there are proactive steps you can take to protect your finances and your vehicle. By acting quickly and communicating with your lender, you can often find flexible solutions that work for you. This guide will help you navigate your options and reduce stress during difficult times.

Steps to Take if You Can’t Make Your Car Payment

• Contact Your Lender Immediately – Be upfront about your situation; many lenders offer temporary hardship programs.

• Review Your Loan Agreement – Understanding your loan agreement, including grace periods, late fees, and the availability of deferment or refinancing, can empower you to make informed decisions about your financial situation.

• Ask About Payment Extensions or Deferrals – Some lenders may allow you to skip a payment and add it to the end of your loan.

• Consider Refinancing Your Auto Loan – Lowering your monthly payment through refinancing may make it more manageable.

• Explore Selling or Trading In Your Vehicle – If payments are consistently unaffordable, downsizing to a more budget-friendly car can help.

• Create a Budget and Cut Non-Essential Expenses – Freeing up funds for your car payment reduces the risk of long-term damage to your credit.

• Seek Professional Financial Counseling – Credit counselors can help negotiate terms with lenders and provide budgeting strategies.

• Avoid Ignoring the Problem – Taking immediate action is crucial. Delayed action may result in repossession, which is costly and damaging to your credit score. It’s always better to act before it reaches that point.

• Voluntary Repossession – If you have exhausted all other options, you can voluntarily surrender your vehicle to the lender. While this is a serious step and will still negatively impact your credit, it can be less damaging than a complete repossession, as it may reduce or eliminate some of the associated fees.

• Seeking Professional Counseling – Professional financial counseling is a crucial step in managing your car payment difficulties. A professional financial counselor can provide unbiased advice and help you create a budget or a debt management plan to address your situation. Their expertise can help you navigate your options and make informed decisions, ultimately leading to a more stable financial future.

What to Do When You Can’t Make Your Car Payment FAQs

Q: Will missing one car payment hurt my credit?
A: One missed payment may not appear on your credit report if paid quickly, but late fees may still apply. However, after 30 days, most lenders will report it, which can impact your credit score. More importantly, ignoring your car payment can lead to repossession and significant damage to your credit history. It’s always better to act before it reaches that point.

Q: Can I refinance my car loan through the dealership?
A: Yes, many dealerships, including Spitzer Automotive, can help you explore refinancing options to lower your monthly payment.

Q: What happens if I ignore my car payment?
A: Ignoring your car payment can result in repossession and significant damage to your credit history. It’s always better to act before it reaches that point.

Q: Can I trade in my vehicle if I still owe on it?
A: Yes, dealerships can work with you to roll over the remaining balance into a new, more affordable vehicle.

Q: What is the difference between a deferral and a loan modification?
A: A deferral or forbearance is a temporary pause on payments, with the missed payments added to the end of the loan term. A loan modification is a permanent change to the terms of your loan, such as a lower interest rate or a longer repayment period, to make the payments more affordable.

Q: What is a “deficiency balance”?
A: A deficiency balance is the difference between what you owe on your loan and the amount the lender receives from selling your vehicle after a repossession or voluntary surrender. You are still legally responsible for paying this remaining balance.

Find Out More From Spitzer 

At Spitzer, we understand that life can present unexpected challenges. We’re here to help you find a solution that works for you. And as you navigate your way back to financial stability, our Spitzer VIP program is here to reward you. Every dollar you spend on service, parts, and accessories earns you rewards that can be redeemed for future services and accessories or applied toward the down payment on a new or used vehicle. The Spitzer VIP program not only provides a safety net but also a path forward, helping you get back on the road and stay there with confidence. Speak with our finance experts and learn more about how the Spitzer VIP program can assist you today!