What Happens When You Can’t Pay?

Times can be tough right now. Ford Concord and other Ford dealerships have pledged to help young drivers get into their new Fiesta. The finance department at Salem Chevrolet Dealer has a lot of rebates available right now, so stopping in is definitely worth your time to see if they can help you get into a new vehicle. But what about those of you who have already purchased a car, say from Volkswagen Peoria or maybe even somewhere else, and you find yourself right now in a financially tight spot. How are you going to make your monthly payment? What if you just can’t make that payment, what will happen and what are your options to avoid repossession?

The first thing you should do is to call your lender! They agreed to finance you so they have an interest in receiving your payment as well. This will likely not be the most favorite call you ever make and the lender will ask a lot of personal information. Keep in mind, you did ask them for money and now you need their help again. They already have a lot of your personal information, so a few more details about your current situation might really help in the long run.

Your lender may be able to lower your interest rate depending on your credit score and payment history. The lender may also give you a deferment on your payment for 30 days to help you out. If these options do not remedy your situation, consider a higher interest rate with payments spread out over a longer term. This will only lower your monthly payment so you don’t default, but you will end up paying more over the life of your loan. Consider shopping around also to try to refinance with a different lender.

Repossession typically happens when you are more than 120 days late on payment. Your car will be taken and sold at auction. You will still then be responsible for paying the remaining balance on your car loan, and when a car is sold at auction, you can count on there being a substantial balance left for you to pay on a vehicle you no longer get to drive.  The point to take away here is to contact your lender ASAP!