Life can change fast. One minute you’re riding high, earning plenty and life is good. Next, you’re on furlough or on reduced hours and are struggling to make ends meet, having to pay for a car loan with a reduced income.
If you’re in the latter camp, our Burlington car loan team outlines a few practical ideas for managing a car loan with a reduced income.
Assess the Situation
First, check your household budget to see how the reduction in income will impact you.
If things will be tight but you’ll still end up with money left over each month, life will be more frugal than before but you’ll be fine.
If you’re going to end up in the red and don’t have enough for your current lifestyle, you have some changes to make.
Your budget will show you exactly where you are, how much you’ll have left over or will be short.
Take Care of the Essentials First
If you now end the month in deficit, take a long look at your budget and make sure all life’s essentials are being paid. Your rent or mortgage, bills, taxes and any other essential outgoings you might have.
Factor your Burlington car loan into the essentials list. You’ll need to keep paying it unless you’re in a position to refinance or sell the car.
Now check to see how much you’ll have left over once that has all been paid.
Identify Simple Savings
Depending on how much you have left after paying the essentials, you may need to make simple savings or more substantial ones.
Simple savings could be cutting down on eating out, reducing impulse purchases, not having a vacation this year, shopping around for groceries or gas and simple cutbacks that don’t impact your lifestyle too much.
Keep cutting until you can cover all your monthly expenses with a little left over.
Cut Back Further if Required
If simple savings aren’t enough, you’re going to have to get tougher with those cuts.
Identify how much you need to save each month and put together an emergency budget to see you through. Cut all extra expenses like coffee, lunches, breakfast, eating out and make your own food and drink.
Cut as much entertainment as you can handle and binge Netflix for a couple of months. Reduce income wherever you can to minimize outgoings as much as humanly possible.
It should only be for a while, until work picks up again or you get another job.
Talk to your Lender if you’re Facing Trouble Making Payments
If you do all that and still fall short of your obligations, talk to your car loan company to let them know. You may be able to take a payment holiday, pause payments, refinance to a cheaper car loan with a reduced income, or something else.
Talk to them before anything happens and they can be surprisingly helpful!
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!
For any questions or concerns, please don’t hesitate to contact us here!