For most of us, a reliable vehicle is absolutely necessary. Unless one has access to public transportation to work, we truly require something more convenient and parked in our garage. So, if your car is taken away from you because you are unable to make monthly payments, it would not only jeopardize your ability to travel from point A to point B, but more importantly, it will do horrible damage to your credit score and credit report.
In a scenario where you have a hard time paying off your car or any kind of loan, you should pass the word along to your lender as soon as possible. If you wait for them to follow up with you on your missed payments, they may lose trust and will ultimately report to the credit bureaus in Canada. Involuntary repossession will look really bad on your credit report and your chances of getting approved for an auto loan again will be lowered substantially.
Therefore, the most important thing for you to do after you realize your missed payments is trying to pay them off with a late charge directly through your lender. However, if you still do not have enough money, there are certain steps that may come in handy in such circumstances.
- Enlighten yourself on your lender’s deferment policy. Some banks have the provision of skipping a payment or two and adding the same towards the end of the loan. They will just ask you to pay the interest part for those months which is relatively lower than the full payment(s), allowing you some more time to muster the actual amount. It is, however, noteworthy that every bank/lender has an individual set of regulations and they may need you to have the loan valid while you inquire about deferment. Therefore, anticipating the payment problem and then educating yourself on delaying the transactions is the way to go. Moreover, most banks only permit one or two deferred payments over the entire span of the loan.
- Another pivotal way to ease your loan worries is changing the due date of the financing. If allowed by the lender, you can exercise this option in order to buy some more time in order to initiate the money.
- You can also refinance your car in a way that your term extends so you can have the payments in your affordability. Note that you might end up paying more in the long run but you will salvage your vehicle.
- If the options above do not work, you can try selling your vehicle if it is worth more than what you owe. And you can use that money to finish off your loan and the remainder can be invested in something more affordable.
- Further, finding someone who is ready to accept the responsibility of your vehicle and the loan can be fruitful. However, you must first confirm with the lender that all the documents are in place in relation to the ownership of the financing. This is because if the entrusted party fails to make the payments, you will have to reacquire the responsibility.
If everything fails, you should seek debt counselling in order to leverage your debts efficiently so you can pay off your car loan quickly.
If you wish to learn more about credit and ways to build it faster, click here or call us at 1-855-550-5565 today to speak to a credit specialist.