It’s a position nobody wants to be in but something many Canadians find themselves having to contend with. Even before the pandemic, people would find themselves in difficult situations through no fault of their own and didn’t always know what to do.
Our Welland auto loan team are experienced in handling debt enquiries like this so gave us the information we needed to create this post.
We hope it helps.
First thing’s first. Don’t panic. Everyone needs help at some point in their lives and there is help available. There are also some practical things you can do to handle the situation.
Don’t Miss a Payment
The second most important thing to remember is to never miss a payment. This will put a dent in your credit score and cause the lender to change their attitude towards you.
Neither of which you want when you may need your score and your lender’s help later on.
Once you have those two sorted, we have some practical steps you can take to get out of the loan. Choose the one that best suits your situation. Or contact one of our Welland auto loan team to discuss your needs.
Discuss Things with your Lender
If you think you’re genuinely getting into trouble, talk to your lender. Discuss your situation and work out a deal where you can pay off the loan over a longer term for lower monthly payments.
Not all lenders will agree but most will. They know it’s cheaper and safer to change the terms of the loan rather than risk you defaulting and them losing money.
They may have tools you can use to help such as payment holidays, changing the loan terms or something else entirely.
If your lender cannot help, you still have options.
Refinance the loan – If you have paid off a portion of the loan, you may be able to refinance it for a cheaper one. For example, if you’re a year into a 4 year loan, you will have paid off around 20% of the principal amount. You could use that to borrow less and pay off the unaffordable loan.
Pay off the loan with savings – If you have savings or an emergency pot, you could use that to pay off the loan. It may leave you exposed for a while but could prevent you defaulting on the loan.
Transfer the loan – If you know someone who could take on the loan for you, it is possible to transfer the loan to them. The lender would need to agree and the person would need to qualify for the loan but it is an option.
Sell the car – This is obviously the step of last resort but is a viable way to escape a car loan you cannot afford. If you drive a luxury or premium car, you may be able to pay off the loan and have money left over for something cheaper. If it’s a second car, you may be able to make do until things improve.
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!