Thousands of Canadians have found themselves in difficult situations through no fault of their own. The pandemic has wrought devastation across all aspects of our lives and financial difficulties are just one aspect of that.
So what can you do if you’re having difficulty paying your car loan?
The first thing we want you to do is relax. While it’s a tough situation, you have options and nothing serious has to happen yet.
Managing an unaffordable auto loan
While it may be a difficult situation to find yourself in, it isn’t terminal and you have lots of options for where to go next.
Work with your lender to come to an agreement for lower payments – Most lenders will be willing to work with you to adapt the loan so you can pay it off in full. Some offer payment holidays to help in temporary situations while others will lower your monthly payments until things pick up.
Sell the car – You can always sell the car. While it may leave you without transport, if you have paid enough of the loan off so you could afford something cheaper while paying the loan off, that could be an answer.
Refinance the loan – If you’re well into your auto loan and have plenty of equity, or you have a bad credit car loan, you can refinance for something cheaper. This is a viable method of reducing your payments while keeping everyone happy. And keeping your car.
Voluntarily surrendering the car – The option of last resort. If you have a secured car loan, you can offer to surrender the car instead of continuing to pay for it. This will significantly impact your credit score but can get you out of a difficult situation.
We would suggest only surrendering the car once you have exhausted everything else. It’s your option of last resort and really should only be done if you have no other choice.
Before you take action
Before you take action, take a long hard look at your finances. If you’re in a temporary situation that will end soon, a payment holiday or a loan from family may be all you need.
If you think your situation is more permanent, discuss it with your lender first to see what they can do. Only consider selling your car if you have another or don’t need it.
If you need help with auto loan refinancing, we have the skills and the willingness to help.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!