Your car is important for getting to work, making appointments, and ferrying kids around to various activities, if you have a family. When you can’t afford your vehicle because of financial hardship but neither can you live without transport, it’s a tough predicament. It might be good to know there are a number of potential options for getting on top of your payment issues while retaining ownership of a vehicle.
Modified Auto Loan
If you are experiencing a temporary income shortfall, reach out to the lender to see if they are prepared to modify your auto loan. Forbearance is a common arrangement that lenders facilitate, where the debtor is given short term relief on the terms of payment. There are a number of potential options when it comes to forbearance that a lender may consider.
You may end up making payments that are a lower amount, for a number of agreed upon months, allowing you to better manage your finances. This is an option that debtors who are temporary out of work due to illness or other issues may wish to work out with the lender. Alternatively, the lender can amend the terms of the loan to offer a lower interest rate and reduced monthly payments. Any deferred amount is then added to the end of the loan, meaning you will continue to pay off your car over a longer period of time.
Refinancing a Vehicle Loan
If you have good credit, the lender may agree to refinance the loan and facilitate lower monthly repayments. There are two ways in which this can be achieved: Either the lender will extend the length of the loan or the lender will reduce the interest rate. If the length of the loan is extended, it will mean paying more interest on the total principal. If your lender is not open to refinancing the loan, you can also seek refinancing through another lender.
It is important to be aware that most lenders who deal in vehicle loans may not be open to refinancing, which is where other lenders come into the equation. These lenders will scrutinize your credit profile before agreeing to facilitate refinance, so this option is not guaranteed to work out.
You may not have the option of renegotiating the terms of an auto loan when you can’t afford your vehicle. Filing for a Chapter 13 bankruptcy prior to the repossession of a vehicle may result in you keeping the vehicle. A court-approved repayment plan often results in more affordable payments that will help you better manage your finances through a Chapter 13 bankruptcy. You may be able to reduce the interest rate, extend payment length of time, or possibly even reduce the amount owed on the vehicle.If you are considering attempting to save a vehicle you can’t afford by filing for bankruptcy, it is important to consult with an experienced bankruptcy lawyer. H. Lehman Franklin, P.C., is a reputable firm with lawyers who will provide compassionate guidance and representation when you are facing financial hardship. Call our offices today at 912-764-9616 or email us at firstname.lastname@example.org.