What To Do If You Can't Make Your Car Payments

If you find yourself asking what to do if you can't make your car payments, then facing it head on is the best place to start. Don't ignore the problem hoping the bank won't do anything about it.

The inability to make a car payment can happen to anyone. Life can have unexpected twists and turns, leaving a gap between the incoming finances and the outgoing expenses.

Your situation may be short-term where you had an unexpected, additional expense come up. Or you may have lost your job and haven't been able to find another one as quick as you thought you would.

In either scenario, immediately contact your bank or lender if you feel you are not going to be able to make your car payments for the month. Let them know what is going on before you get so far behind you can't get caught up.

Depending on your previous payment history, your lender may be able to defer a payment or two, adding it to the end of the loan. This could give you the breathing room you need to get back on your feet again.

Another option is that you could sell the car yourself and get out of having to make your car payments anymore. If the value of your car is more than the loan balance, this may be a viable option. You may end up carrying away some extra cash that you could put towards a less expensive car.

You can trade your car in for another vehicle that is less expensive. The Kelley Blue book, Edmunds or the NADA book can help give you an idea to what your vehicle is worth.

Once you sell you car, buy a car that you can pay cash for. It may not be exactly what you want right now, but it will be paid for. This way you won't have any monthly payments while you are getting back on your feet.

Another option is to refinance the car. This opportunity is only available if, again, the value of the car is more than the loan balance you owe and you have good credit. This option could lower your monthly payment and allow you 45 days before the next payment is due.

You can always get a part-time job. Where this may not sound like the most favorable option, it may carry the most benefit for allowing you to keep your wheels. This will allow you to continue making payments as promised to the lender, keeping your credit score in favorable standing.

As a last resort, you can give the car back to the lender. Doing so voluntarily will save you some possible embarrassment, however it will not help your credit score. A voluntary repossession still shows up on your credit report and has the same negative impact as a regular repossession.

And, you may end up owing the lender money if your car is worth less than what you owe. The lender will sell your vehicle at a wholesale auction, and then apply that amount to the defaulted loan, and you will be required to pay the balance. Essentially, you will continue to pay for a car you no longer can drive. Keep in mind this should be your last choice.

Remember you can't just walk away from the car and the loan, just because you can't make your car payments.

When difficult situations come up and you find yourself wondering what to do if you can't make your car payments, you do have options.

Being upfront and proactive may be the best way to avoid the stress and losing your car, which will continue to mount if the situation is swept under the carpet and ignored.

By the way, do you want to learn more about how I show my clients to save money on their vehicles?

If so, download my free eBook here: How to Buy Smart so you'll know if you are paying the right price for your vehicle.