How to Catch Up with Past Due Car Payments

20 Jul

Personal finance can be a slippery slope. When you start to fall behind on one type of payment, it’s easy to start missing other payments as you scramble to pay back what you owe. If you’ve fallen behind on your car payments, don’t panic. There are a number of steps you can take to dig yourself out of the hole and avoid repossession. What’s important to remember is that your lender doesn’t want you to lose your car. Nobody wins in this scenario, as they end up with a used vehicle to sell at a loss while you end up without a car. For this reason, lenders are often more than willing to work with you to help you pay off your past due payments.

Get Organized with a Budget

To get started, sit down and look at your financial situation carefully. Look at what bills are owed, and what your current budget looks like. You may need to prioritize your bills in order of important. Your mortgage or rent is the most important expense to keep a roof over your head. Utility bills should also be at the top of the list. Create a new budget to see where you can cut corners each month until you’re out of the financial hole. You may need to cut all unnecessary spending until you’re up to date on your bills. This includes entertainment, clothing, and even your daily coffee.

Contact your Lender

After you’ve taken a good hard look at your finances, you should see how much extra you can put forward towards payments each month. Now is the time to get in touch with your lender to see what your options are. They may be able to delay a payment or stop interest for a short period of time while you catch up. When you talk to your lender, be honest about the situation so they can help you. Is this a short-term problem like a hefty medical bill you had to pay, or did you lose your job?

Examine the Options

Many lenders will work with car owners on a case-by-case basis, so the options will vary depending on your situation. Some possible actions could include refinancing your loan, deferring your payments for a short period of time, or waiving late fees. One of the most common solutions to missed car payments is to extend the terms of the loan. This allows the lender to waive the next few payments you would normally owe, and then add them to the end of the loan instead, giving you some time to save money. However, interest will continue to build up during this time. In more serious cases you may need to trade your car in for a lower-cost option. For instance, if you can’t afford your BMW payments you may need to look at Carsales for a more affordable model, like an Opel Astra. This allows you to keep a car, but one that is more suited to your current situation.

It can be scary to say the least when you start falling behind in your payments, but the worst thing to do is to stick your head in the sand. Get proactive and find out what your options are to get back on your feet. Many lenders will be willing to help you, but you have to take the first step.

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