Can’t Afford Your Car Much Longer? Negotiate to Keep It


As so many are still struggling to manage paying their regular bills while living paycheck to paycheck, every day another car gets repossessed because families can no longer afford to finance their vehicles. Last year alone, more that 1.9 million vehicles were taken from those who defaulted on their loans. Just like the mortgage industry, people are seeking ways to keep their cars and still be able to afford the essentials.

Consumers may still have options even when their pay has been cut or their job has been lost. Auto lenders and banks prefer to keep people in their vehicles rather than go through the repossession process. More lenders are willing to negotiate an auto loan modification these days and it may be in your best interest to ask for help.

Modification Options

Essentially there are two ways you can go about getting help. The key to getting that assistance is to be upfront with your lender about your financial situation and be proactive in your request. Don’t wait until you are three months behind on your loan and the repo man is in your driveway before taking action. As soon as you sense a struggle with meeting your loan obligation, get on the phone.

The two options for assistance are:

Extension of the loan term – if you ask about extending the term of your auto loan, the lender will allow you to tack payments to the back end of your loan. For instance, the lender agrees to forbear three months worth of payments for May, June, and July. Those three months will be added to the end of your loan term and you are not obligated to pay on your note during the agreed upon three months. Likely your lender will charge a fee for this extension so be sure to ask about it when agreeing to the extension. Some lenders will only allow for one extension during the life of the loan but again, it doesn’t hurt to ask your lender directly.

Lowered interest rate – you might consider speaking to your lender about lowering the interest rate of your loan which will help to lower the monthly payment, making it more reasonable for you to meet your obligation.

Refinancing Your Loan

The process of refinancing the existing balance of your car loan can be a complicated process. More lending institutions are now advertising loan modification programs for vehicle loans but in a somewhat misleading way. Consumers are often led to believe the refinancing process is simple and instant. It may be in your best interest to skip the refinance with another company and stick with your original lender to negotiate help.

Remember that you will likely need to have a reasonable excuse as to why you can not paid. Job loss or illness may be acceptable reasons for why you might default on a loan. Bad money management is not a valid reason. Most lenders are willing to work with customers since the recession has financially damaged so many around the nation but they are still a business operation looking to get paid what they are owed. Make contact with your lender as soon as you think trouble is on the horizon and figure out what options make sense for your financial situation.

The worst thing you can do is ignore the situation until it gets so far out of hand that the law gets involved or your credit gets ruined. Debt does not go away and only gets worse over time. You have options to keep your vehicle so exercise those options and save your car and credit for the future even if you are still scraping by each paycheck.

Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.

Wise Think is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to

Guest's picture

Very helpful article. I had this problem a few years before. I am kinda regretful because I haven't had the chance to read this article back then.

Guest's picture

I've never been in a situation like this, but these seem like really excellent tips. I'm glad that you brought these points up. I think it's really easy for people to just let things deteriorate without taking any action, until they are forced to, or until it is too late to salvage the situation. Encouraging people to be proactive, and prevent the situation from going bad is a great idea!