When Your Car Payment Is Too High
Did you think about high car payments during the purchase? Probably not. Well, most people don’t consider them too much when they’re swept up in the excitement of buying a car. But, situations change and your car payments can become too high for you to afford. How do you overcome this catastrophe?
With Equity: Refinance Or Sell
You need to first determine whether you have equity in the car. Find out the value of your car and compare it to the amount that you owe toward the loan. Do you owe less than your car’s value? If yes, then you have positive equity. If not, then you have negative equity. With positive equity, you can consider selling your car to a dealership. This is one of the easiest ways to get out of an unaffordable car payment. Your credit scores will remain safe and your loan will be cleared in full. What’s more, you may even have some cash towards a manageable car purchase.
Do you wish to keep your car? Then refinancing is an option to consider. Interest rates are always on the rise. You may not be able to find refinancing rates that are lower than your present loan, but refinancing will help you stretch the loan period and make the car payments more manageable. You may shell out more money on interest rates, but you get to keep your car.
There are several peer-to-peer leasing sites that let you post your vehicle online. If another shopper likes your vehicle and agrees to all the terms, then you may transfer your lease to him/her. This is conditional upon the agreement of a concerned financial institution and whether the shopper is qualified for the lease.
Having negative equity can be troublesome. Selling off your car will not spare you from car payments. You will need extra cash to clear the difference between what you owe and the actual value of your car (if that’s the case). The best way is to have an honest talk with your dealer. Dealerships often have good customer care teams that strive to work out the best solutions. They will understand your situation and try to find helpful options. Some lenders also allow forbearance, which is a limited time period in which you do not have to make payments. Check whether the dealer is willing to make adjustments in the loan document. This will help you accommodate manageable payments.
In The Event Of Repossession
Not all is lost in the repossession of your car. You lender may still let you have the car back. This process is called as reinstating or redeeming your repossession. You will need to make some quick moves once you are presented with this option. The time frame for regaining the possession of your car is under two weeks. You may have to pay an amount that lowers your loan in order to get it back.
Unaffordable car payments are mainly due to a lack of planning and awareness. People get attracted by instant gratification and find themselves stuck with high payments. Pumping up your credit scores and finding the right way to navigate your situation will help you face this challenge with ease.