Around 13% of Americans are unemployed, thanks to the COVID-19. And the number could keep climbing as the virus continues to spread, an astonishing 13% may even be an understatement. We already know, it is affecting many people’s financial situation.
76% of Americans rely on their car as their sole form of transportation to get them to and from work, as only a very small percentage work from home or use public transportation.
But with many people out of work, they’re falling behind on their bills–and they may need car payment assistance.
In this blog post, we’ll discuss some of your options to avoid repossession during this crisis. Read on for more information.
Create a Budget
Before you start thinking about ways to negotiate your car payment bills, make a monthly budget for your personal finance. Include things like rent, utilities, and food, and try to include anything extra you may need to get through this period of quarantine.
When writing out your budget, don’t forget to include things like auto insurance, home insurance, and even little things like Netflix or Disney+. These can often be overlooked, which will make it look like you can afford more than you can on paper as opposed to reality.
With your expenses all laid out in front of you, it may become clearer that there are things you can cut back on in order to keep paying your car payments. Or, if your landlord is nice enough to offer you a discounted rate for your rent, see if you can’t then reappropriate your rent payment to your car payment.
Before you go looking for alternatives, always see if there is a way you can cut back. Paying your bill in full is the best bet, so you’ll want to see if there is a way you can do that.
If you’ve been struggling to make your car payments for a while, and now they’re stretching you too thin, now might be a good time to take stock. What can you do differently each month? Why have car payments been a struggle?
If your financial troubles are not related to COVID-19, this is very helpful, and a great way to get you back on track.
Reach Out to Your Current Lender About COVID-19 Programs
13% of people out of work and climbing, with most businesses at a standstill, isn’t something that car companies can ignore. They know that many of their customers are facing hard times; if they’ve not already lost their jobs, they know they could be soon. As such, they’re offering a variety of financial services to help them stay on top of their monthly payment, no matter if you’re paying on a new or used car.
Depending on the dealership where you purchased your car, and what make of your car, there are several options available. Many companies are offering deferment plans so that you can have a period of “vacation” where you do not pay your payment for a set time.
However, you may still need to pay the entirety of the deferred payments in due course, so you’ll need to be clear on that before entering into an agreement.
In most scenarios, though, you won’t be charged a late fee. But the balance, and interest, may still accrue on your car loan. Always try to get a lower interest rate when discussing your options.
Other companies are offering attractive offers for new buyers, such as zero-percent financing and a low down payment for up to several years for those that have a pristine credit score on their credit report. There are even companies that are offering job loss protection schemes, agreeing to pay car payments or lease payments for up to six months if the owner loses their job.
Remember, your wait times may be increased exponentially due to many customers calling about COVID-19 relief. But, you should remember to set up a plan instead of ignoring your bill and hoping it goes away. Spoiler: it won’t.
Discuss Your Options with Your Lender
If you’re unable to make payment plans for a reason other than the spread of COVID-19, you’ll need to discuss your options with your lender. You may still be able to take advantage of the COVID-19 programs. Or, some lenders may allow those who have lost their jobs directly due to COVID-19 take part.
Although people can sometimes be embarrassed to ask about help with their car payments, remember, lenders, hear this all day every day. They also know how to negotiate with lenders who are unable to make their payments.
Ask what options are available, and they can help you find one that works best for you and your circumstance. As with the COVID-19 programs, it is important to understand whether or not you’ll be accruing interest if you’re deferring payment. You should understand exactly what the rate is and how much you’ll need to pay to catch up with the payments.
Don’t blindly enter into an agreement thinking it’s a good deal, only to find out that your interest rate has gone through the roof.
Create a Payment Plan with Your Lender
If your current car payment is too high, but you could manage it if it were just a $200 less per month, for example, discuss this with your lender. You can take into account your loan balance, and get lower payments for your monthly car payments.
A lender may suggest this when you call to work out a plan, or you may call and suggest this yourself. Your lender may be amenable to a plan like this, especially if you state this is only for a set period.
You may wish to lower your car payment for a few months, for example, and then decide to pay the full payment again once the time period ends.
Although you cannot predict when things will be “back to normal” again, this can still help you keep your car and not become overdue with your finances.
Change Your Car Payment Due Date
If you’re in a very tight spot, but know you’ve got some money coming later in the month, or in a couple of months, you may be able to change the car payment due date. This can help some people by giving them an extra few days to get on their feet or get their money together.
Although this may seem like a nonstarter in the age of COVID-19, it can still help people who are receiving grants or will be receiving bailout money from their companies. Pushing the payment back will then mean you won’t have to pay a late fee on top of everything else going on.
Discuss Your Debt Issues with a Debt Coach
Did you know that there are people out there at specifically work with those who are in debt? If that sounds like something that might help you, make an appointment to speak to a debt coach.
A debt coach can help you look at all of your debts and all of the money that you have coming in. They can take stock of everything and help you make the best decisions for your debt. As they’re a neutral party, they may be able to see blind spots you’re unable to see when it comes to figuring out what you can cut each month.
They may also be able to offer you solutions you may not have been aware of that can help you with your car payments now, or in the future.
Refinance Your Auto Loan
If you have the option to refinance your auto loan, now might be the perfect time to do so. Speak to your lender about the options you have to refinance so that you may be able to get a better rate or a lower car payment rate per month. By refinancing, you can instantly lower your loan payments. Or, you may take out a new loan to do so.
Remember, during this period, there may be a lot of people attempting to do this. As such, you may expect to be on the phone for quite a long time as you attempt to navigate a refinance.
If you own a car with a credit union, you may see what they offer in terms of refinancing.
Sell Your Car
If car payments have become a huge financial burden, and you’re already working from home, selling your car may be an option. This may be difficult during COVID-19, however, as not as many people will be in the market for a new car.
However, it isn’t impossible. But, if you normally rely on your car to get to and from work and to get necessities like groceries, you should only consider this as a very last-ditch effort. You must remember that these unsettling times will end, and you will return to work, possibly outside of your home.
But, if selling your car will alleviate your financial burden and you will still be able to get around without it, it can be a good option for you. Or, you may wish to trade in your car. If you do so, check your car’s trade-in value before you take your car back.
You may also wish to have a voluntary repossession. This is where you stop your car payments by returning your car to the lending company.
Car Payment Assistance: Remember There Are Options
When you need car payment assistance, there are options out there, but they may not always be the most palatable. You’ll need to consider each option carefully before making your final decision.
Are you looking for more information on how to save money? If so, visit our auto loans section for some tips and tricks.