According to data released Tuesday by the Federal Reserve Bank of New York, at least 7 million Americans were 90 or more days behind on car payments at the end of 2018. The number has risen by 1 million since the end of 2010. Check out our Auto Debt Explosion Infographic for more stats. Cars are a necessity for the majority of Americans and a car payment is one of the top 3 expenses in our budget. Have you fallen behind on your car payment or are worried that you won’t be able to sustain it? Here are three tips for bringing it current and avoiding repossession.
1. Communicate with Your Lender
If you start to fall behind on your car payment or see the signs that it might happen soon, call your lender immediately and let them know your situation. Lenders are much more willing to work with you if you are open and up-front about your financial issues. Your lender may provide hardship programs, waive late fees or offer you with a deferment. A deferment will help you avoid a negative hit to your credit report or repossession by moving your payment to the end of the loan term.
2. Review Your Budget
If you are having trouble fitting the car payment into your budget, it’s time to review your spending and determine whether there are any areas you can decrease. Your car is likely high on your list of priorities so you’ll want to identify other areas that are lower on that list to cut. Some flexible expense areas to pay particular attention to are: entertainment, dining out, groceries, or subscription fees. In addition, you may want to consider ways your car can make you money that can help you pay your car payment, such as driving for Uber or Lyft.
3. Find a Long-term Solution
If you’ve cut your budget and the car payment is still unsustainable, you’ll want to consider a long-term solution such as selling or trading in the car for a cheaper one or refinancing your loan to get a lower payment.
A repossession will hurt your pocketbook and your credit so make sure you are proactive in searching for a sustainable solution for your car loan. Also know, you don’t have to deal with it alone! Apprisen is here to help you review your budget and understand your options.