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facing problem with your car loan payments

The post COVID-19 era has changed the financial situation for millions of Americans. And when it comes to owning cars, the price can be all consuming. Tens of thousands of borrowers across the United States that got cars on finance may be finding it hard to stay current on their monthly car payments. If you are one of them then it is better that you take some pre-emptive actions which can ensure that you don’t go delinquent on your car payments. To that effect, here are a few steps that can consider for preventing your credit slate in sliding down further.

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What To Do When You Fear an Auto Loan Delinquency?

First Contact Your Lender – When you are faced with a dire financial situation that makes it practically impossible to manage funds for monthly car payments, the first thing that you should do is contact your lender and explain your present financial circumstances to a loan representative. Lenders may consider modification of auto loan terms and conditions of the auto loan by a differing couple of missed payments, lowering interest rates and extending loan repayment duration to make monthly car payments more affordable to you. Lenders usually don’t want to initiate the car repossession process which incurs huge costs. Besides, the federal government has urged all lenders to work with customers during times of financial hardships caused by the COVID-19 pandemic.

Which Other Options Do You Have to Handle Car Payments?

Refinance Your Car to Get Better Terms – The car refinancing option is always there to help you in lowering auto loan interest rates and get an altogether new loan term. For financially struggling borrowers, a car loan refinance can reduce the burden of high-interest rates and monthly installments instantly. But to qualify for the lowest private auto loan rates, it is vital that you have maintained credit in good standing. If it is bad, talk to our credit counselor today! Refinancing your car can free up your cash flows which you can use to pay off other debts and build credit faster.

Sell or Trade-in Car/Use Your Home Equity – To get rid of a bad auto loan:

  • Sell your vehicle – Rather than going upside down on your car loan, it is desirable to sell your car for a price that is worth it.
  • Consider car trade-in – You can even think of trade-in of your car to buy a new vehicle on finance as such a move will save you from the ignominy of a credit downslide. But such a decision needs to be carefully considered as it can have adverse effects on your already sagging home economy.
  • Use your home equity – If your home has in-built equity, you can convert it into cash and repay the auto loan dues quickly to become debt-free quickly.
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William Stiller
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