What to do if you can’t make car payments
When people are struggling, they often prioritize their basic needs and move their car payments to the bottom of the list.
Yet it’s important to not lose sight of the long-term effects that skipping payments may have on your credit. Eventually, you will want to have your credit in good shape. But how can you do that when times are tough?
Call your lender. Others are in the same boat, and lenders may be able to offer reduced payments or give you an extension.
Many lenders, especially the captive finance companies owned by the automakers, have enacted policies for people who have lost their jobs because of the coronavirus pandemic. Loan deferment is the most common relief option.
Loan deferments are an agreement between the lender and the customer that allows the customer to delay his or her car payments for a specified period of time. The skipped month or months are then added to the end of the loan.
Keep in mind that interest will typically continue to accrue during the deferral period, so you will generally pay more in interest over the length of the loan.
Also, make sure your lender approves a loan deferment before you stop making payments. Deferment is not the same as delinquency, and your credit will not be affected so long as you and your lender are on the same page.
If you’re leasing, you may be eligible for a payment deferral. Check with your lender to see if it’s willing to do this. And if you’ve locked in a particularly good low monthly rate and your lease is ending soon, ask for a lease extension, which could buy you some time until you’re back on your feet.
Another option is peerto-peer lease exchange websites such as Swapalease
or LeaseTrader. A person who needs to get out of a lease posts his or her vehicle on the site. If a shopper sees your listed vehicle and likes the terms, that shopper can take over the lease provided that the bank allows it and the shopper qualifies.